Edward  C.  Hegeler.  A  Protest  against 
"the  Supreme  Court  of  Illinois  [rej 
Hegeler  v.  1st  Nat'l  Bank  of  Peru, 111 


THE  UNIVERSITY 

OF  ILLINOIS 

LIBRARY 


•  ..-•    ' 


A   PROTEST 


AGAINST  THK 


SUPREME  COURT 


ILLINOIS, 


AND  ALSO  AGAINST  ITS  LEGAL  AND  MORAL  DOCTRINE 

AS  EXPRESSED  IN  AND  ILLUSTRATED  IN  CONNECTION  WITH  THE  CASE  OK 

* 


C.  HEGELKR 
vs. 
THE  FIRST  NATIONAL,  BANK  OK  PERT. 


A'cportcti  in  Illinois  A'cport. 
/  'ol.  /-'<;,  /(/i,'v  757. 


BY  THE  PLAINTIFF  IN  THE  CASE. 


CHICAGO  : 

Tine  OPEN  Coi  RT  PI-BUSHING  Co. 
1890. 


A   PROTEST 


AGAINST  THE 


SUPREME  COURT 


OF 


ILLINOIS, 


AND  ALSO  AGAINST  ITS  LEGAL  AND  MORAL  DOCTRINE 


AS  EXPRESSED  IN  AND  ILLUSTRATED  IN  CONNECTION  WITH  THE  CASE  OF 


EDWARD  C.  HEGELER  "\ 

•«  / 

vs.  \. 

THE  FIRST  NATIONAL  BANK  OF  PERU.  \ 


Reported  in  Illinois  Report. 
Vol.  129,  Page  757. 


BY  THE  PLAINTIFF   IN  THE  CASE. 


CHICAGO  : 

THE  OPEN  COURT  PUBLISHING  Co. 


\ 


TO    THE  PUBLIC:- 

My  objects  in  publishing  this  pamphlet  are  public  as  well 
as  personal  : 

Firstly — The  Supreme  Court  has  insinuated  a  charge 
against  me  in  deciding  the  case  entitled  "  Edward  C.  Hegeler 
against  the  First  National  Bank  of  Peru,"  (vol.  129  Illinois 
Reports,  page  157)  which  I  must  not  suffer  to  pass  unrepelled 
and  whose  groundlessness  and  sophistry  I  must  expose.  I 
owe  it  to  my  present  and  future  good  name  and  to  my  family 
to  correct  the  misinformation  and  misrepresentation  that  as- 
perses my  conduct  and  reputation  in  connection  with  the  case 
in  view. 

It  devolves  upon  me  not  only  to  manifest  the  absolute 
groundlessness  of  such  charge,  but  also  to  express  the  disdain 
that  I  properly  and  naturally  feel  for  those  who  assail  my 
honor. 

Secondly — It  seems  to  me  a  duty  I  owe  to  the  public  to 
expose  the  delinquencies  of  the  tribunal  that  is  capable  of 
needlessly  and  falsely  visiting  upon  those  suitors  that  are  com- 
pelled to  appeal  to  it  for  justice  the  burden  of  imputations  that 
are  unmerited  and  that  infringe  upon  their  unsullied  charac- 
ters. 

Thirdly — I  deem  it  proper  and  of  urgent  need  that  certain 
doctrines  and  standards  of  law  and  morals  that  receive  the 
sanction  of  our  highest  judicial  tribunal,  should  be  openly  dis- 
cussed, to  the  end  that  the  public  may  understand  their  de- 
based character  and  the  moral  incompetence  of  those  who 
sustain  them. 

THE   CASE — PRELIMINARY. 

On  Dec.  22nd,  1882,  the  De  Steiger  Glass  Company — a 
corporation  of  La  Salle,  Illinois,  whose  capital  stock  was 
$50,000 — had  been  carrying  on  for  several  years  at  that  place 
an  extensive  glass  manfacturing  business  and  had  made  most 
of  its  deposits  with  and  transacted  most  of  its  financial  affairs 
through  the  First  National  Bank  of  Peru. 

On  the  date  mentioned  above  the  bank  caused  to  be 
entered  up  against  the  glass  company,  in  favor  of  the  bank,  in 
the  Circuit  Court  of  La  Salle  county,  Illinois,  upon  corre- 


42243 


Bought  of  DE  S.TEIGER  Cf-LASS  COMPANY 


Manufacturers  of 


Glass,  Green  and  Amber  Glassware, 

•Wine,  Brandy,  Mineral  Water  and  Beer  Bottles,  Flvisfcs,  Fruit  Jars  me 

* 


/' 


-•' 


I  credited  this  showing,  and  according  to  it  the  total 
liabilities  of  the  company  were  $40,660,  part  of  which,  viz., 
the  window-house  mortgage  of  $5,000,  I  was  to  refund  for  a 
longer  period,  leaving  a  floating  indebtedness  of  $35,660. 
Against  this  the  assets  showed  material  and  stock  partly  speci- 
fied in  "Exhibit  C"  and  bills  receivable  of  $33,550,  so  that  the 
real  estate  outside  of  the  window-house  mortgage  ( which  was  a 
separate  part  of  the  plant  of  secondary  importance)  was  wholly 
available  as  unincumbered  assets  over  and  above  liabilities  to 
within  $2,110  of  its  value.  I  was  convinced  that  whatever 
embarrassments  the  glass  company  was  suffering  were  due 
solely  to  its  lack  of  a  sufficient  working  capital  and  that  the 
proposed  loan  of  ten  thousand  dollars  by  me  would  very 
scantily  supply  that  need.  The  subject  of  security  for  my 
proposed  loan  arising,  the  effect  upon  the  credit  of  the  glass 
company  of  a  mortgage  in  my  favor  was  discussed,  and  the 
prejudice  which  the  giving  of  a  mortgage  (even  if  small)  on  its 
property  by  a  business  concern  is  apt  to  excite.  The  supposi- 
tion of  a  non-recorded  mortgage  was  mentioned  here  and  I 
told  Mr.  De  Steiger  that  I  did  not  want  such  a  mortgage, 
because  I  regarded  such  course  as  dishonest  against  the  public. 
And  I  then  suggested  to  Mr.  De  Steiger  that  his  proper  way 
was  to  negotiate  a  loan  from  somebody  to  the  amount  of  forty  or 
fifty  thousand  dollars  by  mortgage  on  the  plant  so  as  to  make 
the  company  independent  of  credit  and  do  a  cash  business. 

As,  however,  such  a  measure  would  require  considerable 
time  to  consummate  and  as  the  glass  company  represented  its 
needs  as  immediate,  the  discussion  relating  to  a  large  loan  by 
a  mortgage  on  the  entire  plant  was  only  incidental.  There- 
fore, in  conclusion  of  our  negotiations  and  in  full  faith  in  the 
representations  made  fo  me  by  the  glass  company  of  its  finan- 
cial condition,  I  loaned  to  it  the  ten  thousand  dollars,  taking 
only  the  ordinary  notes  of  the  glass  company  endorsed  by  the 
members  of  the  De  Steiger  family,  who  were  apparently  its 
officers  and  principal  stockholders,  and  who,  according  to  Mr. 
De  Steiger 's  statement  "  Exhibit  C,"  had  still  an  unsettled 
estate  amounting  to  $35,000  which  belonged  to  the  De  Steiger 
family,  equal  shares  among  five.  These  notes  were  three  in 
number,  all  of  them  dated  September  2  ist,  1882.  Two  of  them 
were  each  for  the  sum  of  $2,500,  due  severally  and  respectively 


in  six  and  twelve  months  after  date.  The  third  note  was  for 
the  sum  of  $5,000,  due  eighteen  months  after  date.  Each  of 
them  was  endorsed  in  guarantee  of  the  payment  of  the  same 
by  Phil  R.  De  Steiger,  E.  A.  De  Steiger,  A.  F.  De  Steiger, 
J.  L.  De  Steiger,  \V.  F.  Modes,  Chas.  C.  Modes,  George 
Modes,  and  May  E.  Burton. 

In  view  of  the  expedient  advised  by  me  of  raising  an 
ample  working  capital  for  the  glass  company  by  a  large  loan 
on  its  entire  plant,  and  as,  by  the  statements,  the  company 
would  still  have  to  carry  a  floating  indebtedness  of  $25,660 
after  receiving  the  desired  loan  from  me,  I  required  of  the 
glass  company  as  one  of  the  conditions  of  my  $10,000 
loan  a  written  promise  by  it  that  in  case  it  made  resort  to 
a  mortgage  on  its  property  it  would  give  me  a  first  mort- 
gage. 'The  document  expressing  this  promise  obtained  in  my 
suit  the  designation  "  Exhibit  L."  The  fac-simile  following 
this  page  is  a  photographic  copy  of  the  same,  viz.  : 

Again  on  November  2oth,  1882,  the  glass  company, 
through  its  same  officer,  asked  for  assistance  by  way  of  a  tem- 
porar}'  loan,  and  I  advanced  to  it  the  further  s.um  of  $4,500 
for  twenty  days  against  its  plain  note,  and  I  renewed  this 
note  for  another  twenty  days  on  December  gth,  1882,  only 
thirteen  days  before  the  seizure  of  the  whole  visible  property 
of  the  glass  company.  The  renewal  of  this  note  was  guar- 
anteed by  the  same  endorsers  as  before,  but  as  to  the  original 
I  do  not  recollect. 

Now  instead  of  exposing  to  me  its  real  financial  condi- 
tion at  the  time  of  its  application  for  the  loan  of  ten  thousand 
dollars,  and  instead  of  having  no  other  liabilities  outside  of 
those  stated  in  "Exhibit  C"  (see  p.  4),  and  instead  of 
being  liable  to  the  Peru  Bank  in  only  the  sum  of $4, 300  (see  p. 
4)  and  to  others  outside  of  the  window-house  mortgage  in 
the  aggregate  sum  of  $31,360  (see  p.  4),  the  glass  company 
was  at  that  time  liable  to  the  bank  in  upwards  of  the  sum  of 
$40,000,  and  so  had  been  and  unable  to  pay  any  considerable 
part  of  the  same  for  upwards  of  eight  months  prior  thereto. 
At  the  time  of  the  trial  the  bank  presented  an  additional  claim 
of  over  $17,000,  making  its  whole  claim  upwards  of  $57,000. 

It  was  also  hopelessly  insolvent,  owing  debts  which  it  was 


E.TC:HEGELER, 


F.  W.  MAT1HIESSEN.  Sec'y 


^5/    X&rty   ^j^^^T^i^T^ 


£2- — ^P^/J--2_-^-^^--'Z--*>T_--»'n^x-^^e^-p^<-.>/ 


^J         <5>^*— r>o 


unable  to  pay,  besides  its  liabilities  to  the  bank,  to  at  least  an 
amount  equal  to  the  amount  of  its  bank  liabilities. 

Moreover,  and  very  notable  in  its  relations  to  my  case, 
the  glass  company  had  more  than  eight  months  prior  to  the 
time  of  its  obtaining  my  loan  of  $10,000,  viz.,  on  January 
ioth,  1882,  executed  and  given  to  the  bank  the  two  judgment 
notes  above  referred  to  (see  p.  4),  upon  which  the  above- 
mentioned  judgments  in  favor  of  the  bank  (see  p.  4),  were 
entered;  and  the  same  were  then  at  the  time  of  the  application 
of  the  glass  company  to  me  lying  hid  in  the  hands  of  the  bank, 
ready  and  about  to  issue  for  the  purpose  of  transferring  the 
entire  visible  estate  of  the  glass  company  to  the  sole  benefit  of 
the  bank. 

Thus  the  means  by  which  the  glass  company  obtained 
from  me  my  money  was  fraud  of  the  most  conspicuous  sort. 

At  once,  upon  the  entry  of  the  above  judgments  by  con- 
fession in  favor  of  the  bank,  it  was  perceived  that  proceedings 
were  begun  which,  in  the  natural  course,  must  operate  to  trans- 
fer to  the  benefit  of  the  bank  alone  the  entire  visible  estate  of 
the  glass  company,  and  by  necessary  consequence  must  defeat 
all  attempts  by  the  unsecured  creditors  to  obtain  payment  of 
their  dues. 

Surprised  and  vigilant  inquiry  was  naturally  provoked 
into  the  business  history  of  the  glass  company  and  especially 
into  the  relations  and  transactions  between  it  and  the  bank. 

It  was  ultimately  discovered  that  they  were  of  a  very 
peculiar  description,  as  follows,  viz.  : 

THE  CASE  AS  TO  THE  BANK. 

The  First  National  Bank  of  Peru  was  organized  under  the 
National  Banking  L,aw,  with  a  capital  of  $100,000.  At  the 
time  of  the  transactions  here  referred  to,  Theron  D.  Brewster 
was  its  President  and  Robert  V.  Sutherland  was  its  Cashier. 
It  employed  regularly  as  its  Attorney  and  Counsel  Judge  G.  S. 
Eldredge. 

The  glass  company  began  doing  business  with  the  bank 
about  January  i,  1879. 

As  early  at  least  as  the  summer  of  1880  the  bank  was  noti- 
fied that  the  glass  company  was  in  need ;  for  it  failed  to  meet 
its  notes  and  obtained  from  the  bank  extensions. 


8 

This  need  grew  rapidly  during  the  rest  of  i-SSo  and  in 
1881. 

By  the  National  Banking  Law  all  banks  organized  under 
it  are  forbidden  to  loan  to  any  single  corporation  an  amount 
greater  than  ten  per  cent  of  the  capital  of  the  bank,  which  per- 
centage in  this  case  was  $10,000.  Still,  in  spite  of  this  man- 
date, and  during  the  latter  part  of  1880  and  the  first  part  of 
1 88 1,  the  bank  had  very  largely  over-loaned  to  the  glass  com- 
pany this  legal  limit;  and  whatever  may  have  been  its  anxie- 
ties besides,  it  was  specially  anxious  to  conceal  its  fault  from 
the  National  Bank  Examiner,  who  made  his  visit  to  the  bank 
in  December. 

Having  already  in  its  hands  more  than  $10,000  worth  of 
the  delinquent  paper  of  the  glass  company,  a  very  large  amount 
of  which  had  been  from  nine  months  to  over  a  year  over-due,  the 
bank  during  the  period  from  about  the  middle  of  August,  1881, 
to  about  the  middle  of  December  in  the  same  year,  ostensibly 
loaned  to  the  glass  company  over  $30,000  by  way  of  app'arent 
discounts  of  one  note  and  thirty  drafts  accepted  respectively 
by  one  or  the  other  of  various  parties. 

The  quality  of  this  paper  can.be  judged  by  reference  to 
the  remarks  of  the  Circuit  Court  Judge  in  his  decision  of  my 
suit,  viz.:  "  Geer  was  the  only  one  of  the  acceptors  who  was 
"a business  man,  and  in  a  business  requiring  such  a  product 
"  as  the  glass  company  made.  Burton  was  a  brother-in-law  of 
"  DeSteiger  and  was  a  laborer  in  the  glass  company's  works, 
"  and  Munn  was  a  lawyer  in  Chicago  and  not  a  customer  of 
"  the  glass  companv. 

"  It  further  appears  in  evidence  that  Phil.  R.  DeSteiger 
"  told  another  member  of  his  company  that  this  was  sham  and 
"  worthless  paper  and  that  Sutherland  the  Cashier  knew  it ;  but 
"the  glass  company  had  got  into  the  bank  so  deep  that  it 
"could  not  help  itself,  and  that  Sutherland  required  these 
' '  deceptive  acceptances  to  be  renewed  from  time  to  t>  me  to 
1 '  deceive  the  bank  examiner. ' ' 

None  of  this  paper  was  ever  paid  by  the  acceptors  or  by  the 
glass  company,  but  as  it  fell  due  it  was  renewed  from  time  to 
time  by  the  bank.  The  bank  was  well  aware  of  the  charac- 
ter of  this  paper,  for  it  discounted  large  amounts  of  it  after  the 
acceptors  had  failed  to  pay  former  acceptances  and  also  even 


9 

took  no  pains  to  send  other  large  amounts  to  the  acceptors  for 
collection.  Mr.  Brewster,  the  President  of  the  bank,  admitted 
in  his  testimony  in  my  suit  that  he  understood  that  the  glass 
company  was  really  getting  its  capital  from  the  bank. 

By  the  loth  day  of  January,  1882,  over  $13,000  of  these 
acceptances  had  become  due  and  delinquent  and  the  rest 
amounting  to  over  $17,000  were  morally  sure  to  follow  in  the 
same  course,  as  indeed  eventually  proved  to  be  the  case. 

The  glass  company  was  also  liable  to  tha  bank  on  other 
paper,  so  as  to  make  an  aggregate  liability  of  about  $55,000. 

About  $16,000  of  this  other  paper  was  considered  to  have 
no  other  value  than  that  lent  to  it  by  the  credit  of  the  glass 
company. 

In  this  situation  the  glass  company  proposed  to  give  a 
mortgage  on  its  entire  plant  as  security  for  the  liabilities  of 
the  glass  company  to  the  bank,  the  same  to  stand  also  as 
security  to  Dr.  Corbus,  who  was  endorser  on  about  $8,000 
of  the  same  paper,  as  well  as  an  endorser  on  paper  of  the  glass 
company  for  about  $5,000  at  Freeport.  This  proposition  was 
made  at  a  meeting,  held  at  the  bank  over  the  situation,  on  the 
above  date,  January  10,  1882.  There  were  present  at  this 
meeting  Phil.  R.  De  Steiger,  the  President  of  the  glass  com- 
pany, Dr.  Corbus  and  the  President  of  the  bank  (Mr.  Brew- 
ster), its  Cashier  (Mr.  Sutherland),  and  its  Attorney  (G. 
S.  El  dredge). 

Mr.  De  Steiger,  himself,  on  behalf  of  the  glass  company,at 
once  and  spontaneously,  offered  to  give  the  wholesale  mort- 
gage. He  came  to  the  meeting  with  Dr.  Corbus,  his  endorser, 
fully  expecting  that  that  measure  would  be  exacted  of  the 
glass  company  by  all  interested.  But  it  was  the  bank  that 
demurred  and,  after  private  consultation  with  its  lawyer, 
objected  to  this.  It  was  the  bank  that  manifested  special 
concern  for  the  credit  of  the  glass  company,  and  thrust  for- 
ward that  argument  against  the  giving  of  the  mortgage. 
Its  officers  testify  in  my  suit  to  that  effect.  Mr.  Brewster,  the 
President  of  the  bank,  testifies:  "He"  (that  is  De  Steiger) 
"  came  in  in  a  few  days  with  Dr.  Corbus  and  said  he  came  to 
"  give  us  security  and  also  Dr.  Corbus  on  the  paper  he  was  on 
' '  at  Freeport,  that  he  wanted  to  give  a  mortgage  on  his  prop- 
"  erty.  We  consulted  about  that  and  finally  we  told  him  that 


"  if  we  took  a  mortgage,  putting  it  on  record  might  affect  their 
' '  credit.  I  went  back  and  talked  with  Judge  Eldredge,  and  the 
"officers  of  the  bank  thought  best  to  take  a  judgment  note 
"  instead  of  a  mortgage." 

"It  was  for  our  interest  to  have  them  continue."  "  I 
agreed  that  we  would  try  to  keep  them  along." 

And  on  cross  examination: 

Q.  "  And  it  was  first  proposed  that  a  mortgage  should 
be  given.  Who  made  that  proposition  ?  " 

A.      "  Phil  R.  DeSteiger." 

Q.      "  Who  raised  the  objection  to   giving  a  mortgage  ?  " 

A.  "I  think  Judge  Eldredge  raised  the  objection  to  giv- 
ing a  mortgage." 

Q.  ' '  You  said  something  about  placing  a  mortgage  on 
record  would  hurt  or  destroy  their  credit."  "What  was  it 
you  said  on  that  subject  ?  " 

A.  "I  said  that;  that  I  thought  it  would,  if  we  took  a 
mortgage,  meaning  if  we  took  a  mortgage  that  effect  would 
follow.  To  put  it  on  record  would  injure  their  credit." 

Q.  "  And  you  thought  if  you  took  a  mortgage  putting  it 
on  record  would  ruin  their  credit  ?  " 

A.      "Yes  sir." 

Q.  ' '  And  that  was  the  reason  then  why  you  did  not 
take  a  mortgage  at  the  time  ?  ' ' 

A.     "  That  was  one  of  the  reasons  ;  yes,  sir." 

Q.  "  And  in  lieu  of  the  mortgage  and  putting  it  on 
record  you  took  this  judgment  note  of  $35,000  and  kept  that 
in  your  safe?" 

A.     "Yes,  sir." 

Q.  '  That  did  not  appear  in  any  manner  upon  your 
books  ?  ' ' 

A.      "  No,  sir." 

And  Mr.  Sutherland,  the  Cashier  of  the  bank,  testified: 

"Philip  DeSteiger  first  suggested  giving  a  mortgage  at 
"the  meeting  January  10,  1882,  and  I,  Mr.  Brewster,  and  Judge 
"  Eldredge  objected  because  we  were  afraid  it  would  injure  the 
"credit  of  the  glass  company." 

Q.  "You  thought  that  the  taking  of  a  mortgage  of 
$35,000  and  putting  it  on  record  that  that  would  be  publish- 
ing to  the  world  the  condition  of  their  accounts  with  you  and 


11 

the  amount  of  their  obligations  to  you  and  it  would  injure 
their  credit  ?  '* 

A.      "  Yes,  sir." 

Q.  "And,  therefore,  instead  of  taking  a  mortgage  and 
putting  it  on  record,  you  took  the  judgment  note  of  $35,000  ?  " 

A.  "  Yes,  sir.  Mr.  Phil.  R.  De  Steiger  said  at  the  time 
that  we  have  the  total  indebtedness  of  the  glass  company 
except  such  as  might  have  been  contracted  on  account  of 
workmen  and  material  used  there  in  the  factory.  I  supposed 
at  the  time  he  was  telling  the  truth." 

That  the  glass  company  represented  at  the  meeting  of 
January  10,  1882,  that  it  had  no  considerable  indebtedness 
beyond  the  liabilities  in  which  the  bank  was  interested  except 
for  labor  and  material,  was  also  testified  to  by  Mr.  Brewster, 
the  bank  President,  who  also  testified  that  he  then  believed 
the  same. 

So,  not  according  to  the  purposes  of  the  glass  company 
as  it  had  projected  them,  but  upon  the  potent  persuasions 
of  the  bank  prompted  solely  by  concern  for  its  own  inter- 
ests, it  was  tacitly  agreed  (that  is,  for  reciprocal  considerations, 
mutual  assent  or  coalescence  of  minds  to  the  same  set  of  exe- 
cutive doings  was  mutually  affected)  between  the  bank  and 
the  glass  company  that  the  glass  company  instead  of  virtually 
going  into  liquidation  should  continue  in  business  ;  that  the 
'credit  of  the  mutually-recognized-as-insolvent  and  credit- 
worthless  glass  company  should  be  supported  and  fostered  as 
to  others  ;  that  as  means  to  that  end  no  mortgage  as  proposed 
should  be  given,  but  in  lieu  thereof  that  the  entire  substance  of 
the  glass  company  should  be  so  put  into  the  power  of  the  bank 
by  judgment  notes,  that  while  others  should  be  led  to  believe 
that  good  recourse  was  available  for  their  present  and  prospect- 
ive credits  on  the  property  of  the  glass  company  that  belief 
should  always  prove  disappointed  ;  that  as  further  means  to 
the  same  end  the  existence  of  such  judgment  notes  should  be 
concealed  by  the  bank,  and  the  glass  company  allowed  to 
retain  the  apparent  full  control  of  its  property  as  free  to  the 
recourse  of  other  present  and  prospective  creditors ;  that  the 
bank  should  further  financially  assist  the  glass  company,  and 
that  the  glass  company  should  in  the  present  and  future  prefer 


12 

the  bank  over  its  other  present  and  future  creditors  and  govern 
its  conduct  accordingly. 

This  expedient  of  taking  wholesale  judgment  notes  in 
place  of  other  security,  so  proposed  by  Judge  Eldredge,  the 
lawyer  of  the  bank,  was  the  natural  advice  of  a  practitioner 
who  based  his  advice  upon  the  former  decisions  of  the  Supreme 
Court. 

Pursuant  to  the  agreement  thus  effected  the  two  judg- 
ment notes  were  delivered  and  carefully  concealed.  One  of 
them  had  been  given  in  the  usual  way  of  the  business  of  the 
bank  on  December  24,  1881,  and  was  for  the  sum  of  $5,200 
due  ten  days  after  date.  To  this  was  appended,  at  the  time  of 
the  meeting  above  stated,  a  warrant  of  attorney  to  confess 
judgment  at  any  time. 

The  other  was  a  regular  judgment  note  for  $35,006  dated 
January  loth,  1882,  and  due  one  day  after  date. 

This  done  the  respective  parties  to  the  agreement  pro- 
ceeded to  further  carry  out  its  stipulations  and  effected  the  com- 
plete concealment  of  the  judgment  notes,  the  apparent  full 
control  by  the  glass  company  of  its  property  as  free  to  recourse, 
the  obtaining  by  it  of  credit,  the  continuance  of  its  business 
until  the  entry  of  said  judgments,  the  preferment  of  the  bank, 
and  all  the  other  purposes  proposed  to  be  attained  by  it. 

From  February  23,  1882  to  March  9,  1882,  the  glass  com- 
pany had  an  apparent  balance  to  its  credit  on  the  regular 
books  of  the  bank  of  nearly  $8,000. 

Yet,  although  the  $5,200  note  was  overdue,  the  bank 
contrary  to  its  otherwise  universal  custom  and  without  any 
excuse  did  not  require  the  note  to  be  taken  up.  Also,  from 
about  July  12,  1882,  till  the  time  of  the  entry  of  the  judgments, 
the  bank  cashed  the  checks  of  the  glass  company  and  instead 
of  entering  them  all  on  the  books  regarded  some  as  cash  and 
carried  them  along  increasing  in  amount  from  day  to  day  until 
at  the  time  of  the  entry  of  the  judgments  these  amounted  to- 
over  $10,000,  and  upon  them,  and  perhaps  some  other  claims, 
a  further  judgment  against  the  glass  company  in  favor  of  the 
bank  was  rendered  for  upwards  of  $17,000. 

Besides  its  debt  to  me  the  glass  company  between  January 
loth,  1882,  and  the  time  of  the  entry  of  the  judgments  contracted 
debts  to  others  in  large  amounts. 


13 

THE  SUIT  AND   PROCEEDINGS   THEREIN. 

At  the  time  when  the  bank  entered  up  its  judgments  against 
the  glass  company  none  of  my  notes  were  due,  but  upon  my 
demand  therefor  the  glass  company  gave  to  me  on  Dec.  30,  1882, 
a  judgment  note  for  the  amount  owing  to  me,  $14,500,  and  on 
the  next  day  I  had  judgment  in  my  favor  entered  up  and  ex- 
ecution issued  and  levied  on  the  glass  company's  plant. 

As  I  was,  perhaps,  the  largest  unsecured  creditor,  I  filed  my 
bill  in  equity  against  the  bank  in  the  interest  of  all  the  credit- 
ors as  well  as  myself,  and  to  the  best  of  my  advice  and  ability 
prosecuted  the  suit  thus  begun  through  the  different  grades  of 
the  courts  as  long  as  any  legal  resource  was  available.  As  the 
case  was  decided  against  me  in  the  Circuit  Court  on  the  basis 
of  the  former  decisions  of  the  Supreme  Court  regarding  judg- 
ment notes,  I  desired  to  prosecute  the  matter  in  the  Appellate 
and  Supreme  Courts  still  in  the  interest  of  all  creditors  who 
would  join  with  me. 

However,  this  representation  by  me  on  appeal  of  other 
creditors  had  to  be  abandoned  on  the  advice  of  my  lawyer  that 
it  was  impracticable. 

In  every  stage  of  the  proceedings  under  my  bill  the  crit- 
ical and  controlling  question  has  been,  as  of  course  I  was  well 
aware  it  would  be,  the  question  of  fraud,  the  question  of 
whether  or  not  the  relations  and  transactions  between  the  bank 
and  the  glass  company,  morally  fraudulent,  were  legally  so. 

I  was  aware  to  some  extent  of  the  narrowing  influence 
that  the  habitual  recourse  to  precedents  rather  than  to  princi- 
ples admittedly  exercises  upon  the  decisions  of  courts  of  law, 
especially  those  of  lower  rank,  and  so  I  was  prepared  to  sustain 
without  surprise  whatever  disappointments  might  be  in  store 
for  me  by  the  action  of  the  lower  courts,  but  I  strongly  hoped 
and  expected  that  the  Supreme  Court  would  deal  with  the 
question  of  law  involved  in  my  case  in  a  spirit  that  would 
recognize  its  importance. 

Indeed,  I  thought  myself  warranted  in  expecting  from  the 
Supreme  Court  a  marshalling  and  critical  study  of  the  prece- 
dents as  related  to  the  underlying  principles  which  the  prece- 
dents are  supposed  to  exemplify. 

I  believed  that  such  a  mode  of  treatment  would  lead  them 
to  perceive  that  the  business  and  ethical  standards  of  modern 


14 

life  demand  an  application  of  fundamental  principles  in  such  a 
way  as  still  to  operate  to  defeat  all  the  devices  of  fraud. 

THE   LEADING  ALLEGATIONS   OF  THE   BILL. 

The  bill  of  complaint  set  out  the  facts  and  circumstances 
heretofore  recited  at  large,  and  as  the  gist  of  its  import  made 
averments  as  follows,  viz.:— 

"That  although  the  notes  upon  which  said  judgments 
were  confessed  in  favor  of  the  Peru  Bank  were  dated  anterior 
to  the  time  when  the  indebtedness  for  which  said  judgments 
were  confessed  was  contracted,  still  said  notes  were  kept  by 
said  bank  in  its  custody  and  concealed  from  the  knowledge  of 
complainant,  and  the  judgments  thereon  were  confessed  after 
said  glass  company  became  indebted  to  complainant.  That 
it  is  inequitable  and  unjust  for  said  bank  to  assert  a  lien  upon 
said  premises  under  said  judgments  as  against  complainant." 

"Your  orator  would  further  represent  that,  although  said 
judgments  in  favor  of  the  First  National  Bank  of  Peru  were  not 
entered  up  until  December  22,  1882,  yet  said  notes  both  be- 
came due  in  January,  1882,  and  were  each  accompanied  by 
power  of  attorney  to  confess  judgment  at  any  time;  that  prior 
to  January  10,  1882,  the  date  of  execution  of  each  of  said 
powers  of  attorney,  the  De  Steiger  Glass  Company  was  unable 
to  meet  its  obligations,  and  was  insolvent,  which  was  then,  and 
prior  thereto,  known  by  said  First  National  Bank  of  Peru  ; 
that  said  bank  had  cause  for  so  believing  ;  that  just  prior 
thereto  said  glass  company  offered  to  mortgage  its  property  to 
said  bank,  but  said  bank  refused,  because  it  would  injure  the 
credit  of  the  glass  company  and  prevent  it  from  obtaining  else- 
where further  credits  and  loans  ;  that  thereupon  said  bank 
took  from  said  glass  company  said  notes  and  powers  of  attorney 
attached  thereto,  and  agreed  to  conceal  the  same  and  to  allow 
said  glass  company  to  retain  the  full  control  of  the  property  free 
from  any  recorded  or  known  lien;  that  in  pursuance  of  such  agree- 
ment said  First  National  Bank  of  P'eru,  with  the  intention  of 
allowing  said  glass  company  to  obtain  new  and  future  credit 
elsewhere  and  to  defraud  its  creditors,  did  keep  concealed  in  its 
possession  for  over  eleven  months,  and  until  December  22,  1882, 
said  judgment  notes,  when  it  entered  judgment  thereon  and 
took  out  executions  and  made  levies  as  aforesaid,  with  the  ex- 
press purpose  of  defeating  the  just  claims  of  your  orator  and 


15 

other  creditors  of  said  glass  company  incurred  during  the  pe- 
riod of  said  concealment,  and  concealed  the  amount  of  indebt- 
edness from  the  glass  company  to  it  until  December  22,  1882." 

"That  your  orator  advanced  $10,000  Sept.  21,  1882,  and 
$4,500  Nov.  20,  1882,  on  the  false  and  fraudulent  statements  of 
the  De  Steiger  Glass  Company  as  to  its  financial  condition, 
and  upon  the  delusive  and  fictitious  credit  given  it  by  said 
First  National  Bank  of  Peru  in  allowing  it  to  retain  all  its 
property  apparently  free  from  incumbrance,  and  that  had  your 
orator  known  or  suspected  the  existence  of  said  judgment  notes, 
he  would  have  given  no  credits  or  loans  whatever  to  said  glass 
company;  that  such  concealment  enabled  the  glass  company, 
under  the  semblance  of  being  the  owner  of  a  large  amount  of 
unincumbered  real  estate  and  personal  property,  to  deceive  and 
mislead  your  orator  and  other  persons  to  give  it  credit  that 
would  otherwise  have  been  withheld,  by  reason  of  which  said 
glass  company  did  contract  the  aforesaid  debts  to  your  orator, 
now  remaining  wholly  unpaid." 

Voluminous  testimony  was  taken,  all  of  which  was  sup- 
posed to  be  relevant  to  the  allegations  of  the  bill  of  complaint, 
and  in  November,  1886,  the  case  was  tried  in  the  L,a  Salle  Cir- 
cuit Court.  From  that  Court  appeals  were  taken  first  to  the 
Appellate  Court  and  then  to  the  Supreme  Court  of  Illinois. 

While  my  case  was  •  pending  in  the  Supreme  Court,  Mr. 
E.  F.  Bull,  my  senior  counsel,  who  had  had  the  chief  manage- 
ment of  my  suit  and  who  alone  was  at  the  time  fitly  familiar 
with  the  points  of  law  and  fact  involved,  died,  and  the  con- 
duct of  the  suit  fell  upon  his  surviving  partner,  Mr.  Strawn, 
who  was  comparatively  uninformed  regarding  it. 

On  March  5,  1889,  Mr.  Strawn,  in  forwarding  to  me  a 
copy  of  the  brief  on  my  behalf  that  he  was  to  file  on  the  mor- 
row of  that  day,  informed  me  that  the  other  side  would  now 
file  their  brief,  after  which  I  would  have  an  opportunity  to  file 
a  reply  brief  to  whatever  should  appear  to  require  it  in  the 
brief  of  the  other  side. 

The  brief  of  the  bank  was  forwarded  by  mail  on  March 
13,  1889.  On  the  next  day  but  one  I  wrote  to  Mr.  Strawn, 
saying: 

"  I  received  appellee's  brief  and  I  wish  an  answer  to  be 
given  to  the  remarks  of  counsel  on  pages  27  and  28." 


16 

These  "remarks"  were  an  impertinent  and  groundless 
ad  ho  mine  in  argument  appended  by  Judge  Eldredge,  the  law- 
yer of  the  bank,  to  the  main  body  of  the  suggestions  of  his 
brief.  Referring  to  "Exhibit  L,"  and  the  circumstances 
under  which  it  was  given,  he  went  on  to  argue  or  rather  in- 
sinuate that  I  had  done  just  as  the  bank  had,  and  he  concluded 
by  saying  : 

"So  it  will  be  seen  that  this  loan  was  made  upon  the  ex- 
press stipulation  that  he  (Hegeler)  should  have  the  first 
'  '  lien  by  way  of  a  mortgage  on  the  property  of  the  De  Steiger 
"  Glass  Company  when  the  exigency  should  occur  for  its  execu- 


Thus  he  insinuated  that  I  was.  in  collusion  with  the  glass 
company  in  the  same  way  as  was  the  bank. 

At  the  time  of  the  trial  of  my  case  in  the  Circuit  Court 
the  counsel  for  the  bank  and  for  the  glass  company  had  made 
an  effort  to  produce  an  impression  to  this  same  effect  and  had 
entirely  failed  therein.  This  had  also  been  repeated  in  the 
Appellate  Court. 

On  the  next  day  I  received  a  letter  from  Mr.  Strawn, 
•  saying  : 

"  Your  case  with  the  Peru  Bank  has  been  called  and  taken 
under  advisement  by  the  Supreme  Court  and  the  time  for  fur- 
ther argument  is  closed  ,  '  ' 

It  thus  occurred  that  the  sophistries  as  to  my  conduct 
insinuated  into  my  case  by  the  lawyer  for  the  bank  were  not 
immediately  answered  and  resented. 

In  June,  1889,  the  Supreme  Court  filed  their  opinion 
adverse  to  my  contention. 

After  reciting  the  allegations  of  my  bill  (see  p.  14)  as  the 
sole  ground  on  which  I  expected  to  prevail  they  declare  as 
follows,  viz.:  —  "  It  must  be  admitted  that  if  the  averment  that 
'  '  appellee  '  agreed  to  "conceal  the  same,  and  to  allow  said  glass 
1  '  company  to  retain  the  full  control  of  the  property,  free  from 
''any  recorded  or  known  lien,  and  that  in  pursuance  of  such 
"  agreement  it  did  conceal,'  etc.,  was  stricken  out  of  the  bill,  it 
'  '  would  be  demurrable  for  want  of  equity  appearing  in  its  face 
"  Field  etal.  vs.  Ridgley  et  al.,  116  111.,  424." 


17 

"  There  is  not  a  particle  of  evidence  in  the  record  to  sup- 
port that  averment." 

It  would  naturally  seem  that  when  a  court  has  concluded 
that  there  is  no  proof  whatever  of  the  controlling  facts  of  a 
case,  they  were  supplied  with  the  very  best  possible  grounds 
for  dismissing  it. 

But  evidently  such  grounds  were  not  sufficient  for  the 
Illinois  Supreme  Court  in  my  case,  for  they  virtually  proceed 
to  imply  that  my  own  counsel  were  aware  of  the  utter  ground- 
lessness of  the  controlling  averment  and  that  in  arguing  the 
case  my  counsel  virtually  confessed  a  total  failure  of  proof  in 
its  support.  They  go  on  as  follows,  viz. : 

"  There  is  not  a  particle  of  evidence  in  the  record  to  sup- 
port that  averment,  nor  is  it  relied  upon  in  the  argument  as 
being  essential  to  complainant's  cause.  On  the  contrary,  the 
argument  proceeds  throughout  upon  the  proposition  that  the 
bank  took  its  notes  and  held  them  under  circumstances  that 
made  its  conduct  operate  as  a  fraud  upon  others.  There  is  no 
pretense  that  there  was  any  agreement  to  conceal  its  claim 
against  the  glass  company,  much  less  that  any  such  agreement 
was  made  for  the  purpose  of  enabling  the  company  to  obtain 
credit  from  others.  No  evidence  can  be  found  in  the  record 
proving  or  tending  to  prove  acts  or  declarations  on  the  part  of 
appellee  calculated  to  induce  appellant  to  give  credit  to  the 
glass  company." 

Considering  that  a  mere  reference  to  the  record  in  the  case 
and  to  the  printed  briefs  and  arguments  of  my  counsel  is  all 
that  is  needed  for  the  flat  disproof  of  these  wholesale  declara- 
tions we  may  say  that  the  same  ought  to  beat  least  astonishing. 

The  averment  in  question  was  precisely  the  very  gist  of  our 
reliance.  In  all  stages  of  my  case  it  w.is  pretended  by  all 
means  that  the  bank  agreed  to  conceal  its  claim  against  the 
glass  company  and  for  the  purpose  of  enabling  the  company 
to  obtain  credit  from  others. 

In  proof  of  this  I  will  give  some  decisive  quotations  from 
the  brief  filed  by  my  counsel  in  the  case. 

After  printing  in  full  the  controlling  allegations  as  they 
are  hereinbefore  printed  (pp.  14-15)  the  brief  goes  on  : 


18 

"  If  these  allegations  are  sufficient  in  equity  to  authorize 
:'the  relief  prayed  for  then  the  decree  must  be  reversed,  for 
<l  they  hare  been  clearly  and  conclusively  proved,  and  that  too  by 
"  evidence  of  the  officers  of  the  bank." 

Appellant's  Brief  p.  6. 

"The  bank  took  the  judgment  notes  upon  which  these 
"judgments  were  entered  and  held  and  concealed,  the  same  un- 
"  der  circumstances  that  made  their  conduct  operate  as  a  fraud 
"  upon  others."  Appellant's  Brief,  p.  15. 

' '  The  best  way  in  the  opinion  of  the  bank  officers  to  real- 
ize on  the  capital  invested  was  to  continue  the  business  of 
"the  glass  company  in  hopes  that  .it  would  weather  the 
"storm."  Appellant's  Brief,  p.  38. 

' '  Why  did  the  bank  desire  to  sustain  its  ' '  (the  glass  com- 
pany's) "  credit  ?" 

' '  For  no  other  purpose  than  to  enable  it  to  borrow  money 
"and  get  advances  from  others."  Appellant's  Brief,  p.  39. 

But  it  is  needless  to  quote  further.  The  whole  argument  in 
pp.  35  to  42  of  Appellant's  Brief,  is  to  no  other  intent  or  pur- 
pose but  to  insist  that  the  bank  agreed  to  conceal  and  allow 
the  glass  company  to  manage  their  property  as  free  from  liens 
for  the  very  purpose  of  enabling  it  to  obtain  credit  and  money 
from  others. 

MY    PETITION    FOR    A    REHEARING. 

But  the  Supreme  Court  in  its  original  opinion,  not  content 
with  declaring  that  I  had  utterly  failed  to  prove  whatever  case 
could  be  deemed  as  stated  in  my  bill  and  implying  for  my 
counsel  a  lack  of  comprehension  of  the  points  of  the  case,  yet 
as  though  troubled  with  misgivings  in  spite  of  its  sweeping 
declarations,  seemed  to  grasp  for  support  at  the  impertinent 
counter  attack  upon  me  made  by  4:he  lawyer  of  the  bank,  and 
said  :f 

' '  Months  after  the  transaction  between  appellee  and  the 
company,  appellant,  according  to  his  own  testimony,  declined, 
or  at  least  consented  not  to  take  mortgage  security,  beqause  it 
would  '  spoil  their  credit.'  He  refused  to  take  a  mortgage  and 
withhold  it  from  record,  because  he  thought  that  would  '  be 
dishonest  against  the  public,'  but  he  was  willing  to  and  did 


19 

make  an  agreement  with  Mr.  De  Steiger  that,  in  case  the  com- 
pany desired  to  give  a  mortgage  he  should  be  notified  and 
have  a  first  mortgage.  It  would  certainly  be  difficult  to  con- 
demn the  transaction  between  appellee  and  the  glass  company 
without  also  pronouncing  that  of  appellant  fraudulent  (and  he 
is  the  only  one  here  complaining);  but  we  know  of  no  rule  of 
law  or  business  which  condemns  either." 

It  was  evident  upon  the  reading  of  the  opinion  of  the  Su- 
preme Court  that  the  judges  themselves  had  slighted  the  points 
of  the  case.  They  had  failed  to  examine  the  circumstances 
under  which  I  made  my  loan,  shown  in  Exhibits  "C"  and 
"  D,?'  the  written  statement  from  DeSteiger's  memory  and  the 
balance  sheet  furnished  to  me  by  the  glass  company.  Though 
I  hold  that  a  court  of  justice  should  not  pronounce  imputations 
upon  the  character  of  any  suitor  without  the  most  careful  ex- 
amination of  the  testimony,  and  that  a  court  forgets  its  dignity 
when  it  pronounces  in  the  form  of  insinuations  what  it  does 
not  dare  to  pronounce  direct ;  I  had  to  recognize  as  an  excuse 
for  its  conduct  that  they  supposed  from  the  neglect  to  repel  the 
insinuations  of  the  lawyer  of  the  bank  in  my  reply  brief,  either 
that  I  admitted  the  same  or  that  I  was  insensible  to  them,  and 
that  they  also  might  follow  the  same  methods  unchallenged. 
But  I  still  felt  faith  enough  in  the  Supreme  Court  and  in 
their  regard  for  judicial  ethics  to  expect  that  when  they 
should  be  informed  of  the  true  state  of  the  testimony  and  of 
my  sensitive  regard  for  my  good  name,  they  would  absolutely 
withdraw  the  personally  injurious  part  of  the  opinion,  and 
also  reconsider  the  whole  case. 

With  this  view  the  following  petition  for  rehearing  was 
prepared  for  me  by  my  friend  and  counsel,  Gen.  M.  M. 
Trumbull.  Mr.  Strawn,  the  former  partner  of  Mr.  Bull,  also 
lent  his  assistance  at  the  close.  Parts  having  no  reference 
to  the  present  issue  are  omitted.  By  the  rules  of  the  Supreme 
Court  no  argument  is  allowed  on  petitions  for  rehearing,  but 
the  same  must  be  sustained,  if  at  all,  by  the  bare  statement 
of  points. 


PETITION  FOR  REHEARING. 


MAY  IT  PLEASE  THE  COURT  : 

The  appellant,  Edward  C.  Hegeler,  respectfully  asks  a 
rehearing  of  this  cause,  for  the  reason,  amongst  others,  that 
important  evidence,  appearing  in  the  full  report  of  the  testi- 
mony and  favorable  to  appellant,  was  not  presented  to  the 
Supreme  Court ;  that  the  absence  of  this  testimony  was  not 
due  to  any  fault  of  appellant ;  that  by  reason  of  the  absence  of 
this  testimony  the  Supreme  Court  was  misled  to  an  opinion, 
contrary,  as  appellant  believes,  to  that  which  would  have 
resulted  from  an  examination  of  the  full  testimony,  had  it  been 
presented  to  the  court ;  that  by  reason  of  this  incomplete  pre- 
sentation of  the  evidence  the  court  was  led  to  draw  a  parallel 
between  the  actions  of  appellant  and  appellee  injurious  to 
appellant,  and  which  appellant  believes  the  court  would  not 
have  drawn  had  the  full  testimony  been  presented.  This  tes- 
timony, appellant  believes,  was  omitted  from  the  Abstract  by 
appellant's  counsel,  now  deceased,  under  the  belief  that  the 
unjust  insinuation  made  by  appellee  and  disproved  by  such 
testimony,  would  not  be  repeated.  Appellant  had  no  part  in 
preparing  the  Abstract.  For  this'and  other  reasons  appellant 
asks  that  he  may  be  permitted  to  present  some  points  for  the 
information  of  the  court,  believing  that  a  correct  understanding 
of  the  evidence,  in  connection  with  all  the  attendant  circum- 
stances, will  procure  a  reversal  of  the  decree,  and  a  justification 
by  the  court  of  appellant's  motives  and  action  in  the  matters 
investigated  and  adjudicated  in  this  cause. 

I. 

Presentation  of  points  in  support  of  appellant's  petition 
for  a  rehearing  in  the  matter  of  conclusions  drawn  by  the  court 
in  the  following  portion  of  the  opinion  filed  in  the  case  : 

"  There  is  nothing  in  the  bill,  and  certainly  nothing  in  the 
evidence,  to  show  that  at  the  time  appellee  took  its  notes  and 


21 

(Petition  for  Rehearing,  continued.} 

refused  to  take  mortgage  security 'it  did  not  honestly  believe, 
that  notwithstanding  the  insolvency  of  the  glass  company,  it 
would,  if  its  credit  could  be  maintained,  successfully  recover 
from  its  embarrassment,  continue  business  and  pay  all  its 
deb.s." 

1.  Although  there   may  be  very  little  verbal  testimony  to 
contradict  that  part  of   the  opinion,  the  circumstantial  evidence 
tends  the  other  way.     It  shows   that,  although  the  bank   may 
have  had  a  hope  that  the  glass  company  might  recover,  it  had 
no  belief  in  it,  because,    - 

2.  At  the  time  the  bank  declined  a  mortgage,  it  required 
and  received  a  judgment  note  for  $35,000,  a  far  better  security 
for  the  bank  than  a  mortgage. 

3.  This  judgment  note  was  kept  Concealed  from  the  bank 
examiner,  and  from   everybody  else.     It  was  held  by  the  bank 
as  a  secret  lien  in  its  own  favor,  and  against  all  other  creditors 
of  the  glass  company. 

4.  The  evidence  all  tends   to   show  that   at   the  time  re- 
ferred to  the  bank  had  far  more  doubt  as  to  the  survival  of  the 
glass  company  than  belief  in  it. 

5.  It  is  evident  that   the  bank  knew  at  the   time  it  took 
the  secret  lien  that  the  De  Steiger  Glass  Company  was  a  finan- 
cial wreck.     The    record  shows   that   the   bank  officers  knew 
they  were  carrying  more  than  $40,000  of  bogus  drafts  drawn 
by  the  glass  company  upon   men   who   were   notoriously  irre- 
sponsible.    For    instance,    drafts    to    the    amount    of    nearly 
$10,000  upon  employe's  who  worked   packing    bottles    in  the 
packing  house,  saloon   keepers  of  no  responsibility,  and  similar 
men  of  straw. 

6.  And,  in  addition,  the  record  shows  that   from  the  time 
this  $35,000  note  was   given   in   January    until   the   following 
June,  this  fictitious  paper  long  past  due,  and  not  protested,  was 
not   renewed,  and   was  renewed   in  June  not  because  the  bank 
thought  it  bona  Jide  paper,  but  in   order  to  deceive   the  bank 
examiner  who  was  expected  to  examine  the  bank  in  July. 

7.  The  bank  took   a   secret  lien,  both  to-enable  the  glass 
company  to  recover  from  its  embarrassment,  and  to  prolong  its 
.own  life.     It  was  clear  that  a  mortgage  of  $40.000  to  the  bank 


22 
(Petition  for  Rehearing,  continued. ) 

would  close  the  bank.  Taking  judgments  for  $5,325,  $35  050 
and  $18,139.46  did  close  the  bank.  The  bank  must  have  known 
it  was  doomed,  and  took  its  secret  lien  to  enable  it  to  strike  at  a 
more  favorable  opportunity. 

II. 

Presentation  of  points  in  support  of  appellant's  petition 
for  a  rehearing  in  the  matter  of  the  conclusions  drawn  by  the 
court  in  the  following  portion  of  the  opinion: 

"  Months  after  the  transaction  between  appellee  and  the 
Glass  Company,  appellant,  according  to  his  own  testimon}-, 
declined,  or  at  least  consented  not  to  take  mortgage  security, 
because  it  would  '  spoil  their  credit. '  ' 

1.  The  evidence  proves  that  this  was  the  true  reason.     A 
mortgage  for  a  small  amount  on  a  manufacturer's  works  will  de- 
stroy his  credit,  as  it  shows  that  he  cannot  raise  the  money  in 
any  other  way  and  that  some  creditors  are  afraid.     The  re- 
fusal was  against  appellant's  own  interest,  and  in  the  interest 
of  the  glass  company  and  all  its  creditors. 

2.  It  was  not  the  true  reason  why  the  bank  refused  a  mort- 
gage.    The  true  reason  was  concealment  of  the  large  debt. 
It  already  had  large  sums  of  money  in  jeopardy  through  its 
advances  to  the  glass  company,  sums  far  beyond  the  legal  limit. 
Its  own  interests  had  become  identified  with  the  continuance 
of  the  glass  wrorks.     It  risked  nothing.     Appellant  risked  his 
money,  not  as  an  act  of  business  but  friendliness,  and  he  took 
equal  chances  with  everybody  else. 

3.  A  mortgage  taken  by  the  bank  would  have  been  more 
dangerous  to  the  credit  of  the  bank  than  to  that  of  the  glass 
company.     It  would  have  exposed  its  imprudent  and  illegiti- 
mate methods  of  business. 

III. 

Presentation  of  points  in  support  of  appellant's  petition 
for  a  rehearing  in  the  matter  of  the  conclusion  drawn  by  the 
court  in  the  following  portion  of  the  opinion  : 

"  He  refused  to  take  a  mortgage  and  withhold  it  from 
record,  because  he  thought  that  would  be  'dishonest  against 


(Petition  for  Rehearing,  continued.} 

the  public,'  but  he  was  willing  to  and  did  make  an  agreement 
with  Mr.  De  Steiger,  that  in  Case  the  company  desired  to  give 
a  mortgage,  he  should  be  notified  and  have  a  first  mortgage." 

1.  This  part  of  the  opinion  intimates  that  the  acts  of  ap- 
pellant in  this  particular  are  not  consistent  with  the  reasons 
given  by  him,  and  readers  of  the  opinion  might  construe  them 
as  a  charge  that  appellant  had  been  guilty  of  insincerity  or 
hypocrisy,  a  charge  which  the  court  could  hardly  have  intended 
to  make,  and  which  is  disproved  by  every  portion  of  the  evi- 
dence. 

The  agreement,  "  Exhibit  I,,"  is  as  follows  :. 

L,A  SALLE,  ILL,  Sept.  21,  1882. 

We,  the  undersigned,  having  this  day  received  a  loan  of 
ten  thousand  dollars  from  E.  C.  Hegeler,  for  which  we  have 
given  him  our  note  to  that  amount,  hereby  bind  ourselves 
unto  him  that  we  will  not  mortgage  our  bottle-glass  works 
and  window-glass  works  to  any  one  except  him  during  the 
time  that  the'  notes  remain  unpaid,  unless  giving  him  a  first 
mortgage  for  the  amount  due.  And  we  bind  ourselves  not  to 
sell  the  above  glass  works,  or  any  material  part  thereof,  dur- 
ing such  time.  We  also  agree  to  have  fire  insurance  on  our 
property  to  the  amount  of  ten  thousand  dollars  transferred  to 
him,  and  keep  same  up  for  his  benefit. 

DE  STEIGER  GLASS  COMPANY, 
PHIL.  R.  DE  STEIGER,  Prest. 

2.  The  evidence  shows  that  there  was  no  discordance  be- 
tween the  refusal  to  take  a  mortgage  and  the  acceptance  of  the 
written  agreement.     It  shows  the  purpose  of  the  written  agree- 
ment, and  that  appellant  thought  of  reserving  the  right  to  re- 
ceive a  first  mortgage  in  case  the  glass  company  should  decide 
to  mortgage  its  works  to  obtain  a  larger  running  capital ;  or, 
secondly ,  in  case  any  other  creditor  of  the  glass  company  should 
attempt  to  force  it  to  give  a  mortgage.     The  evidence  also 
shows  the  probability  that  appellant  wanted  definitely  to  re- 
serve the  right  to  demand  a  mortgage  in  case  the  statements 
made  to  him  by  the  glass  company  at  the  time  of  his  making 
the  loan  to  it  hastily,  and  without  security,  should  be  untrue 


24 
(Petition  for  /,V//rr //•/////,  <-<>n 

3.  The  words  of  the  court,  "  he  was  willing,"  etc.,  with 
their  context,  might  impty  that  appellant  had  an  agreement 
with  the  glass  company,  that  in  case  they  were  about  to  fail, 
he  might  be  secured  by  mortgage  before  the  creditors  could 
find  out  the  condition  of  the  company,  an  implication  not  war- 
ranted by  the  evidence. 

4.  No  secret  lien  was  contemplated  by  the  written  agree- 
ment in  any  event.     Appellant  declined  to  take  a  secret  lien 
when  he  might  have  done  so,  and  thus  make  himself  secure. 
That  he  contemplated  an  unfair  preference  in  the  future  is  in- 
compatible with  his  action  in  declining  to  take  a  preference 
when  he  lent  his  money.     There  was  no  lien  created  by  the 
agreement,  and  no  publicity  was  necessary  to  be  given  to  it 
for  the  protection  of  anybody.     Publicity  that  appellant  had 
loaned  them  $10,000  without  security,  would  have  enhanced 
their  credit. 

5.  The  judgment  note  given  to  the  bank  was  a  secret 
lien  actually  made.     It  has  no  legal  or  moral  resemblance  to 
the  written  agreement  given  to  appellant. 

6.  The  testimony  of  appellant  concerning  the  object  of 
the  agreement  was  not  brought  to  the  attention  of  the  court, 
although  it  appears  in  the  full  record  of  the  case.     The  testi- 
mony appears  in  the  stenographer's  report  as  follows  : 

Q.  What  transpired  between  you  and  Mr.  De  Steiger 
with  reference  to  security  on  this  loan  at  the  time  you  gave 
it,  if  anything?  Tell  the  court  just  what  passed  between 
you  and  him  on  that  subject. 

A.  Well,  we  spoke  in  a  general  way  about  it — what 
security  he  could  give  me  and  then  it  was  spoken  of  — if  he 
could  perhaps  give  a  mortgage,  and  then  I  think  I  mentioned 
myself,  or  he  himself,  if  he  gave  a  mortgage,  I  think  I  men- 
tioned that — if  he  gave  a  mortgage  it  would  spoil  their  credit 
in  business  ;  and  then  it  was  spoken  of  that  he  perhaps  might 
give  a  mortgage  which  was  hot  recorded — the  idea  suggested 
itself — and  then  I  concluded  further  and  said  that  would  not 
do  because  it  would  be  dishonest  against  the  public  to  hold  a 
mortgage  in  that  way  without  recording  it. 

Q.      (By  Eldredge  for  appellee.)     Who  said  that? 


(Petition  for  Rehearing,  continued.} 

A.  I  said  so.  I  said,  take  the  personal  indorsement  of 
the  members  of  the  De  Steiger  family  to  put  upon  the  back 
of  these  notes  ;  and  then  before  I  gave  him  the  money  I 
asked  him  yet  to  give  me  a  written  promise  that  in  case  he 
should  want  to  give  a  mortgage— should  have  to  give  a  mort- 
gage— then,  before  they  should  give  it  to  anybody  else,  they 
should  give  me  a  first  mortgage. 

Q.     Have  you  that  paper? 

A.     (Producing  Ex.  L. )     I  think  this  be  it. 

Exhibit  L,  offered  and  read  in  evidence. 


Cro.ss-examination  by  MR.  DUNCAN. 

Q.  Did  you  ever  inquire,  down  to  the  time  that  you 
made  either  of  these  loans, — that  is,  either  the  loan  of  Sep- 
tember 2ist,  or  your  loan  of  November  20,  1882 — of  either 
Mr.  Brewster  or  Mr.  Sutherland,  or  anybody  connected  with 
the  First  National  Bank  of  Peru,  as  to  whether  the  De  Steiger 
Glass  Company  owed  them  anything  or  not  ? 

A.     I  made  no  inquiry.     I  have  no  recollection  thereof. 

Q.  They  made  no  representations  to  you  upon  the  sub- 
ject, as  to  whether  the  De  Steiger  Glass  Company  was  indebted 
to  them  or  not  ? 

A.  No,  sir.  I  had  no  intercourse  with  them,  no  recol- 
lection of  any  intercourse  with  them  whatever. 

Q.  Did  you  ever  tell  the  Peru  bank  people,  or  any  of 
them,  that  you  held  this  arrangement  that  is  evidenced  by 
this  writing,  upon  which  you  were  to  have  a  first  mortgage  in 
case  anything  should  happen  ? 

A.     No. 

Q..     You  never  communicated  that  fact  to  them  ? 

A      No,  sir  ;  I  did  not. 

MR.  HEGELER,  recalled.  (After  argument  had  com- 
menced.) 

Q.     Are  you  hard  of  hearing  ? 

A.     Yes,  sir. 

Q.  Difficult  to  understand  frequently  ?  You  have  a  dif- 
ficulty of  understanding  what  is  said  ? 


26 
(Petition  for  Rehear  uuj,  continued.') 

A.  I  overhear  some.  Yes,  sir,  but  specially  I  don't  hear 
all  in  detail  what  is  said.  I  only  hear  in  general  any  ques- 
tion. 

Q:  I  find  here  in  your  testimony  which  is  written  out  this 
question  :  ' '  Did  you  ever  tell  the  Peru  bank  people,  or  any 
of  them,  that  you  made  this  arrangement  that  this  is  evidenced 
by  this  writing  upon  which  you  were  to  have  a  first  mortgage 
in  case  anything  should  happen  ?  ' '  To  which  you  made  answer, 
"No."  Is  there  any  misapprehension  ? 

A.  I  didn't  hear  the  last  words ;  otherwise  I  should  have 
resented  them  on  the  spot. 

Q.  Did  you  have  any  arrangement  with  them  by  which 
you  were  to  have  a  first  mortgage  in  case  anything  should  hap- 
pen f 

A.  In  case  anything  should  happen  !  Nothing  ;  it  was 
quite  another  case.  In  case  they  should  need  the  money,  and 
the  money  I  was  to  give  them  was  insufficient  to  give  them 
running  capital — that  appeared  when  he  brought  in  a  second 
statement  it  was  to  amount — I  think  the  debts  were  $40,000 — 
that  was  the  intention  of  it ;  if  he  gave  me  those — if  I  gave 
him  those  $r 0,000,  and  that  would  not  give  them  sufficient 
running  capital,  yet  in  the  ordinary  course  of  business  for  doing 
successful  business,  and  it  would  apparently  be  or  might  be, 
or  they  might  find  it  was  necessary  they  should  have  a  large 
loan  or  a  larger  amount,  it  would  only  be  possible  on  a  mort- 
gage. I  suppose  he  spoke  at  that  time  that  he  might  have  to 
get  a  loan  of  $50,000  on  a  mortgage.  They  could  get  suffi- 
cient running  capital  for  their  business  only  on  a  mortgage. 
That  idea  suggested  itself  to  me  as  far  as  I  recollect  ;  pretty 
distinct  recollection  ;  then,  in  that  case,  if  they  should  have 
to  give  such  a  large  mortgage,  in  this  way,  in  that  case  I 
•  should  be  secured  on  the  first  mortgage  for  myself ;  that  they 
didn't  give  a  mortgage  to  anybody,  and  I  was  out. 

Q.  There  was  no  arrangement  for  a  mortgage  in  case 
anything  should  happen? 

A.  Never  !  I  would  treat  it  with  contempt  ;  all  other 
arrangements,  except  that  which  appears  in  the  paper  as.  you 
have  explained  it  here  ;  all  what  is  in  the  paper ;  that  is  all. 


27 

(Petition  for  Rehearing,  continued.') 
Cross-Examination  by  MR.  DUNCAN. 

Q.     You  took  this  writing  that  De  Steiger  gave  you,  and 

that  he  signed  as  part  of  the  transaction  between  you  and  him  ? 

A.     That  is  the  last  thing — my  recollection,  the  last  thing 

I  got- 

Q.  Excuse  me  ;  this  writing  that  De  Steiger  made  to  you 
in  which  he  agreed  to  give  you  a  first  mortgage  and  put  you  in 
ahead  of  anybody  else,  you  took  and  kept  that  paper,  didn't 
you  ? 

A.  I  have  kept  the  paper — put  me  ahead  of  anybody  else, 
how  do  you  mean  that  ? 

Q:     Just  what  the  writing  says,  that  is  all  I  mean. 

MR.  BULL  :     The  writing  does  not  say  any  such  thing. 

A.  In  case  he  should  have  to  give  a  larger  mortgage, 
that  is,  what  is  meant  ;  we  have  spoken  of  that  before,  that  I 
am  confident  ;  we  spoke  of  that  before — that  I  had  that  writ- 
ing. I  am  very  certain  that  we  have  spoken  of  that  before  I 
had  that  meeting — that  I  would  have  to — that  he  would  have 
to  take  a  larger  amount  on  a  mortgage — larger  amount  to  give 
him  sufficient  running  capital,  and  in  that  case  that  was  referred 
to,  and  in  that  case  I  should  get  it — that  was  meant. 

As  the  court  has  made  general  intimations  without  defi- 
nite specifications  as  to  appellant's  conduct,  appellant  is  com- 
pelled, for  the  purpose  of  disproving  the  intimations,  to  study 
how  the  court  came  to  its  conclusions  and  to  make  definite 
specifications  thereof. 

From  the  evidence  of  Hegeler,  it  appears  that  appellant 
had  to  draw  up  a  paper  which  stated  that  the  De  Steiger  Glass 
Company  promised  that  as  Hegeler  loaned  it  $10,000  without 
security,  on  its  notes  running  one,  two,  three  and  four  years,* 
it  would  not  mortgage  its  works  during  that  time,  so  as  to  give 
to  any  one  else  a  preferred  claim  on  it  and  its  works.  Does  now 


*  This  is  an  error  owing  to  not  having  the  papers  which  had  been  in 
the  hands  of  the  court  since  the  trial  of  the  case  in  Oct.  1886,  about  three 
years. — The  notes  were  three  only,  and  ran  six,  twelve  and  eighteen 
months  from  Sept.  21,  1882. 


28 

(Petition  for  Rchoi  ri  inj,  <-<>n  tinned.} 


the  paper  drawn  up  by  Hegeler  have  this  meaning  and  only 
this  ? 

A  superficial  examination  may  make  the  reader  believe 
that  the  words  therein  "  except  him,"  are  unnecessary,  and  this 
may  have  caused  the  misapprehension  of  the  court  that  Hegeler 
may  at  that  time  have  had  an  understanding  with  De  Steiger 
that  he  was  to  have  a  mortgage  under  certain  undefined  cir- 
cumstances. If  the  court  will  please  read  the  De  Steiger  paper 
(Exhibit  L),  omitting  the  words  "  except  him,"  the  court 
will  find  that  the  paper  seems  liable  to  be  construed  to  have  the 
meaning  that  De  Steigers  will  not  and  are  not  to  mortgage 
their  works  to  anybody  (which  words  include  Hegeler)  during 
four  years,  except  at  their  oivn  pleasure,  for  the  sake  of  their 
obtaining  a  larger  running  capital.  To  guard  against  this 
meaning  Hegeler  inserted  the  words  "  except  him."* 

The  evidence  shows  that  the  circumstances  at  the  time  of 
drafting  the  paper.  De  Steiger  had  on  the,  or  a  preceding 
day,  applied  to  Hegeler  for  a  loan,  being  pressed  for  money. 
Upon  Hegeler's  request,  De  Steiger  had  written  from  memory 
a  statement  of  their  affairs,  their  assets  and  liabilities  being 
Exhibit  C.  (Abst.  16.)  Hegeler  had  then  demanded  an 
abstract  from  their  books.  At  the  time  Exhibit  L  was  wiitten 
De  Steiger  had  presented  the  abstract  of  the  books  (Exhibit 
D),  which  showed  an  indebtedness  much  larger  than  he  had 
stated  from  memory.  This  must  have  produced  in  Hegeler  the 
uneasiness  that  De  Steiger  might  have  owed  still  more  than 
the  abstract  from  the  books  (Exhibit  D)  showed,  in  which  case 
he  would  not  impair  his  right  to  demand  a  mortgage. 

8.  Appellant's  idea  was  not  that  he  should  be  a  preferred 
creditor  in  case  the  glass  company  might  be  about  to  fail.     On 
the  contrary,  appellant  was  willing  to  take  his  chances,  and  did 
take  his  chances,  with  all  unpreferred  creditors. 

9.  It  is  evident  the  mortgage  thought  of  was  a  mortgage 
large  enough  to  raise  n   sum  sufficient  to  make  the  glass  com- 
pany independent  of  credit. 


:My  recollection  is  that  I  wrote  the  agreement  on  a  slip  of  paper 
which  Mr.  De  Steiger  copied. 


29 
(Petition,  for  Rehearing,  continued.*) 

10.  That  the  court  misconstrues  this  writing  is  evident 
from  the  opinion,  where  it  inserts  into  the  agreement  the 
words  "  he  should  be  notified."  These  words  do  not  appear 
in  the  writing,  and  were  not  within  the  contemplation  of 
appellant. 


IV. 


Presentation  of  points  in  support  of  appellant's  petition  for 
a  rehearing  in  the  matter  of  the  conclusions  dvawn  b}^  the  court 
in  the  following  portion  of  the  opinion: 

"  It  would  certainly  be  difficult  to  condemn  the  transac- 
tion between  appellee  and  the  glass  company,  without  also 
pronouncing  that  of  appellant  fraudulent  ;  but  we  know  no 
rule  of  law,  or  business,  which  condemns  either." 

1.  There  is  no  similarity  of  action  between  the  two  cases. 
Appellant  declined  a  secret  lien  while  appellee  accepted  one. 

2.  Appellant  declined   to  occupy   the  position  of  a  pre- 
ferred creditor  ;  appellee  demanded  and  accepted  that  position. 

3.  The  secret  lien  given  to  appellee  was  to  the  prejudice 
and  misleading  of  other  creditors  of  the  glass  company.      The 
agreement  given  to  appellant  could  not  be  to  the   prejudice  of 
anybody. 

4.  As   the  purposes   of  the   respective   transactions  were 
unlike,  so   the   consequences   were   different.      The    action   of 
appellant  did   not   result  in    benefit   to  himself  nor    injury  to 
others.     The  reverse  was  the  case  as  to  the  action  of  appellee. 

5.  In   drawing   a   moral    parallel   not   warranted    by  the 
evidence,  the  court  may  unwillingly  do   an   injury  to  appellant 
more  serious  than  the  mere  loss  of  the  money  involved   in  the 
suit. 

6.  While  the  opinion  disclaims  any  intention  to  condemn 
the  transaction   assumed   by  the   court  between   appellant  and 
the  glass  company,  it  likens  the  transaction  to  the  action  of  the 
bank,  and    thereby    makes    a    comparison   highly   injurious  to 
appellant. 


(Petition  for  Rehearing,  continued.) 
V. 

Presentation  of  points  in  support  of  appellant's  petition  for 
a  rehearing  in  the  matter  of  the  conclusions  drawn  by  the  court 
in  the  following  portion  of  the  opinion: 

"  It  must  be  admitted  that  if  the  averment  that  appellee 
4  agreed  to  conceal  the  same,  and  to  allow  said  glass  company 
to  retain  the  full  control  of  the  -property,  free  from  any  rec- 
ord or  known  lien,,and  that  in  pursuance  of  such  agreement, 
it  did  consent]  etc.,  was  stricken  out  of  the  bill,  it  would  be 
demurrable  for  want  of  equity  appearing  on  its  face. 

.  "  There  is  not  a  particle  of  evidence  in  the  record  to  support 
that  averment,  nor  is  it  relied  upon  in  the  argument  as  being 
essential  to  complainant's  cause.  *  *  *  There  is  no  pretense 
that  there  was  any  agreement  to  conceal  its  claim  against  the 
glass  company,  much  less  that  any  such  agreement  was  made 
for  the  purpose  of  enabling  the  company  to  obtain  credit  from 
others." 

1.  There  is   no  evidence  that   the  president  of  the  bank 
said  to    the  president  of  the  glass  company:  "In  consideration 
of  the  giving  of  these  judgment   notes  to  us,  we  agree   to  con- 
ceal them;"  but  that  such  was    the  understanding  must    neces- 
sarily be  inferred  from  the  facts  proved. 

The  bank  refused  to  take  a  mortgage  on  the  express 
grounds  of  publicity  and  accepted  the  judgment  notes  on  the 
express  grounds  of  secrecy .  How  could  any  argument  be 
more  clear  and  explicit?  The  arrangement  was  perfectly  un- 
derstood and  mere  promises  would  have  been  but  an  idle 
ceremony.  Their  minds  had  met,  and  that  is  the  gist  of  an 
agreement. 

2.  But  this  court  has  frequently  said  that  positive  admis- 
sion of  fraud,  or  of  a  fraudulent  intent,  are  not  to  be  expected, 
and  many  things  are  indeed  fraudulent  as  to  third  parties  which 
are  not  fraudulent  as  between  the  original  parties. 

3.  We  think  it  must  be  error  to  require  us  to  prove  that 
the  parties  by  words  expressed   a  fraudulent  intent  when  we 
have  proved  facts  which  establish  it. 

4.  In  appellant's  original  argument  cases  quite  similar  to 
the  one  at  bar  are  cited,  where  it  was  held  immaterial  that  the 


( Petition  for  Reliear  ing, -continued.} 

parties  had  no  fraudulent  intent  in  the  concealment  ;  if  the  con- 
cealment did,  in  fact,  operate  as  a  fraud  on  future  creditors. 

5.  Judgment  notes  given  in  cases  of  financial  embarrass- 
ment are  fraudulent  in  case  concealment  by  both  maker  and 
payee  is  an  essential  condition  coupled  therewith  at  the  time  of 
execution;  that  is,  the  concealment  of  the  indebtedness  by  both 
debtor  and  creditor  is  in  fact  the  fraudulent  part.  The  judg- 
ment clause  is  for  the  sole  purpose  of  making  the  conspiracy 

effective. 

* 
*  * 

[Head  VI.  omitted.  It  refers  to  a  technical  point  of  prac- 
tice in  error.] 


* 
*  * 


VII. 

Presentation  of  points  in  support  of  appellant's  petition  for 
a  rehearing  in  the  matter  of  the  conclusions  drawn  by  the  court 
in  the  following  portion  of  the  opinion  : 

"  We  know  of  no  rule  of  law  or  business  to  condemn  the 
transaction  either  of  appellant  or  of  appellee." 

1.  Appellant  insists   that  the  transaction  which  the  court 
assumes  took  place  between  appellant  and  the  glass  company, 
was   fraudulent.       If    the   glass    company   had   found  it   was 
insolvent  .and  came  and   notified   appellant,  and   agreed  or  had 
previously  agreed  to  keep  running  until  appellant  could  get  a 
mortgage  on  record,  even  though  the  delay   had   been  for  a 
single  day   only,  then   for  such  single  day   the   glass    company 
would  have  deceived  its  creditors  and  appellant  be  in  collusion 
with  it. 

2.  It  may  be  said  that  the  glass  company  might  have  had 
the  private   thought,  during  that  single   day,  to  reimburse  the 
creditors  it   was  deceiving,  but   that  does   not   make  the  deed 
undone. 

3.  It  may  be  said   there    might   be  an  understanding  that 
the  instant  the  glass  company  found,  or  came  to  the  conclusion, 
it  was  bankrupt,  its  first  thought  and  action  should  be  to  make 
appellant   a  preferred   creditor,  so   that  there   was    no  time  re- 


(Petition  for  Rehearing,  continued.  > 

quired  for  preparing  and  recording  the  mortgage.  In  that 
case  the  glass  company  would,  of  necessity,  have  had  to  secrete 
such  a  supposed  understanding.  It  would  have  constantly 
asked  men  to  work  for  it  and  asked  persons  to  sell  it  goods  on 
credit  impressing  the  belief  upon  them  that  it  could  and  would 
pay  them,  while  internally  saying  that  it  made  these  men  give 
credit  under  a  peril  which  it  kept  concealed  .from  them,  and  in 
such  deception  appellant  would  have  been  a  participant. 

4.  At  the  same  time  the  bank  bought  from  the  De  S  ei- 
ger  Glass  Company  the  fictitious  drafts  upon  Munn  and  others, 
and  debited  their  "Bills  Payable"   account  and  credited  them 
to  the  De  Steiger  Gla^s  Company,  the  bank  lost  all  claim  upon 
the  glass  company  therefor,  so  far  as  the  public  is  concerned. 
A  debt  can  have  remained   only  to   such  extent  as  the  law  may 
recognize  as  existing  between  two  persons  jointly  occupied  in 
an  unlawful  transaction. 

In  this  view,  together  with  the  view  that  judgment  .notes 
secretly  held  in  cases  of  approaching  insolvency  are  fradulent, 
appellant  filed  his  bill  of  complaint  in  the  Circuit  Court. 

5.  Counsel  for  appellee  say,  on  page    16  of  this   brief: 
"  The  $14,500  Mr.  Hegeler  loaned  the  De  Steiger  Glass  Com- 
]  any,  no  doubt,  added   to   their   appearance  of  being   men  of 
ample  means.     Shall  it  therefore  be  said  he  designed  to,  or  did, 
defraud  other  creditors?     Certainly  not." 

But  if  Mr.  Hegeler  under  such  circumstances  knowingly 
allowed  the  De  Steiger  Glass  Co.  to  represent  to  the  public,  or 
other  creditors,  that  all  the  property  in  their  possession  was 
their  own  and  free  from  incumbrance,  he  would  have  partici- 
pated in  such  deception.  Much  more  would  this  be  the  case  if 
Hegeler  had  been  their  banker  who  is  understood  to  be  always 
watching  his  customers'  proceedings  and  particularly  so  when 
he  believes  them  to  be  embarrassed.  A  banker  is  the  financial 
sponsor  of  his  customer. 

The  honorable  judge  who  tried  this  case  below  said  in 
concluding:  "It  is  a  matter  of  regret  that  by  this  hard  advan- 
tage not  only  Mr.  Hegeler,  but  a  number  of  laboring  men  are 
liable  to  lose  their  demands,  yet  the  validity  and  priority  of 
liens  thus  obtained  has  b.  en  too  often  upheld  to  be  now  changed 


(Petition  for  Rehearing,  continued.} 

* 
by  anything  less  than  a  legislative  enactment."     Will  the  court 

also,  in  our  case  uphold  such  opinion? 


VIII. 

CONCLUSION, 

Appellant  respectfully  suggests  to  the  court  that  owing  t© 
the  death  of  Mr.  Bull,  the  senior  counsel  on  his  side,  who  had 
the  principal  management  of  it,  and  who  was  familiar  with 
the  evidence  and  circumstances,  the  management  of  appellant's 
interest  was  thrown  upon  Mr.  Strawn,  surviving  partner,  who 
was  uninformed  as  to  the  points  which  appellant  particularly 
wished  to  urge  in  this  court.  On  the  5th  of  March,  1889,  aP* 
pellant  received  a  letter  from  Mr.  Strawn,  to  the  effect  that  he 
forwarded  a  copy  to  appellant  of  his  brief,  which  would  have  to 
be  filed  on  the  then  to-morrow,  and  that  after  the  brief  for  the 
other  side  was  filed,  appellant  would  have  an  opportunity  to  file 
a  reply  brief,  containing  any  additional  suggestions  that  might 
be  necessary,  and  asking  that  such  suggestions  be  forwarded. 
Appellee's  brief  was  forwarded  by  mail  to  appellant,  March  13.. 

On  the  i5th  of  March,  1889,  appellant  wrote  a  letter 
to  Messrs.  Brewer  and  Strawn,  saying  :  "  I  received  appellee's 
brief  and  I  wish  an  answer  to  be  given  to  the  remarks  of 
counsel  on  pages  27  and  28."  On  the  i6th  of  March,  appellant 
received  a  letter  from  Messrs.  Brewer  and  Strawn  saying  : 
"  Your  case  with  the  Peru  bank  has  been  called  and  taken 
under  advisement  by  the  Supreme  Court  and  the  time  for 
further  argument  is  closed."  This  did  not  allow  any  time  for 
appellant  to  present  the  points  he  desired  to  present  in  answer 
to  the  injurious  comparisons  and  suggestions  contained  in  the 
brief  of  appellee,  which  comparisons  not  being  contradicted  in 
the  reply  brief  had  probably  led  the  court  to  adopt  them  as 
justified  by  the  testimony,  while  the  testimony  completely  con- 
tradicted them. 

Believing    that    the    Supreme    Court    wrote   the     opinion 
under  a  misapprehension,  and  that  the  court  would  never  treat 


34 
(Petition  for  lltltcaruuj,  < -out in, tied.} 

lightly  the  character  of  an  American  citizen,  nor  of  any  man, 
appellant  respectfully  asked  a  consideration  of  this  case  and 
particularly  of  the  opinion  filed  therein. 

Respectfully  submitted, 

M.  M.  TRUMBULL,  and 
BREWER  &  STRAWN, 

Solicitors  for  Appellant. 

(End  of  Petition  for  Rehearing.) 


PART  II. 

The  Supreme  Court  after  the  full  information  and  sug- 
gestions of  my  petition  for  rehearing  made  at  first  only  some 
very  unimportant  alterations  in  the  verbiage  of  the  obnoxious 
clause  and  in  their  amended  opinion  filed  Oct.  19,  1889,  left 
the  body  of  the  same  to  stand  in  substantially  all  its  insulting 
import.  Their  amended  language  was  as  follows  : 

"  Months  after  the  transactions  between  appellee  and  the 
company  appellant  according  to  his  own  testimony  declined  or 
at  least  consented  not  to  take  mortgage  security  because  it  would 
.injure  its  credit.  He  refused  to  take  a  mortgage  and  with- 
hold it  from  record  because  he  thought  that  would  be  dishonest 
against  the  public,  but  he  was  willing  to  and  did  make  an 
agreement  with  Mr,  De  Steiger  in  case  the  company  desired  to 
give  a  mortgage  on  its  property  he  should  be  notified  and  have 
a  first  mortgage.  It  would  certainly  be  difficult  to  condemn 
the  transaction  between  appellee  and  the  glass  company  com- 
plained of  without  also  comdemning  that  of  appellant.  We 
know  of  no  rule  of  law  or  business  by  which  either  should  be 
pronounced  fraudulent  or  immoral  and  no  reflection  vpon  the 
honesty  or  fair  dealing  of  appellant  is  hereby  made." 

THE    OFFENSIVE    CLAUSE    CHANGES    PLACE. 

However  before  the  publication  of  the  bound  volume  of 
the  repor  s  of  their  decisions  which  contains  my  case,  the 
Supreme  Court  has  seen  fit  to  expunge  from  their  opinion  the 
part  that  expressed  their  adoption  of  the  offensive  insinuation 


36 

of  the  lawyer  of  the  bank,  but  as  it  would  seem  they  would  not 
abandon  the  publication  of  the  same  altogether,  and  so  instead 
of  embodying  the  insinuation  in  the  opinion,  it  has  been  in- 
serted in  the  report  of  the  points  made  by  the  lawyer  of  the 
bank.  As  published  in  the  advance  sheets  the  report  of  my 
case  did  not  notice  this  as  a  point  made  by  said  lawyer. 

This  alteration  by  the  Supreme  Court  of  their  opinion 
does  not  nullify  the  wanton  injury  which  the  publication  of 
the  former  opinions  have  done  to  me,  and  which  the  insertion 
of  the  scandalous  insinuation  in  the  report  of  the  points  made 
by  the  lawyer  of  the  bank  has  perpetuated. 

In  the  bound  volume  one  may  read  as  follows,  viz.: 

"  (Mr.  G.  vS.  Eldredge  for  appellee.) 

******* 
"  Hegeler  made  his  loan  to  the  glass  company  upon  the 
"stipulation  that  he  should  have  the  first  lien  by  a  mortgage  on 
"  the  property  of  the  company  when  the  exigency  should  occur 
"  for  its  execution,"  etc. 

Mr.  Eldredge,  the  lawyer  of  the  bank,  however,  makes  the 
alleged  point  in  his. brief  in  the  language  following,  viz.: 

"  Mr.  Hegeler  said  he  made  these  loans  upon  the  faith  of 
"the  written  representation  made  by  De  Steiger  as  president  of 
"the  glass  company  evidenced  by  exhibits  C  and  D.  The  last 
"exhibit  (D)  Mr.  Hegeler  says  he  received  before  he  paid  over 
"the  money.  The  particular  attention  of  the  Court  is  called  to 
"his  direct  and  cross  examination.  Mr.  Hegeler,  it  appears, 
"  declined  to  take  a  mortgage  as  security  but  insisted  upon  the 
"  personal  endorsement  of  the  members  of  the  De  Steiger 
"family  and  a  written  promise  to  execute  a  first  mortgage 
"  whenever  the  exigencies  of  the  situation  should  require  it,  in 
"the  words  following: 

"'LaSalle,  111.,  Sept.  21,  1882. 

"  '  We  the  undersigned  having  this  day  received  a  loan  of 
" '  ten  thousand  dollars  from  E.  C.  Hegeler,  for  which  we  have 
"  *  given  our  note  to  that  amount,  hereby  bind  ourselves  unto  him 
"  'that  ive  TV  ill  not  mortgage  our  bottle-glass  works  and-windoTv- 
"'  glass  'works  to  any  one  except  him  during  the  time  that  the 
"'  notes  remain  unpaid  unless  giving  him  a  FIRST  MORTGAGE 
"  '-for  the  amount  due.  And  we  also  bind  ourselves  not  to  sell 


36 

"  '  the  above  glass  works  or  any  material  part  thereof  during  such 
" '  time.  We  also  agree  to  have  fire  insurance  on  our  property 
"*to  the  amount  of  ten  thousand  dollars  transferred  to  him  and 
"  *  keep  the  same  up  for  his  benefit. 

"<DESTEIGER  GLASS  Co. 

'• '  PHIL.  R.  DE  STEIGER  'President.' 

• 

"So  it  will  be  seen  that  this  loan  was  made  upon  the  ex- 
"  press  stipulation  that  he  should  have  the  first  lien  by  way  of 
u  mortgage  on  the  property  of  the  De  Steiger  Glass  Co.  when 
"  the  exigency  should  occur  for  its  execution." 

By  thus  quoting  only  a  part  of  Mr.  Eldredge's  brief  upon 
this  matter  and  omitting  to  give  the  part  that  exposes  his 
arts  of  misstatement,  the  Report  of  the  Supreme  Court  leads 
the  reader  to  believe  that  the  counsel  of  the  bank  made  an 
actual  point  on  the  basis  of  a  bona  fide  analysis  of  the  testimony 
to  the  effect  that  I  was  myself  in  collusion  with  the  glass 
company  against  the  public.  Whereas  in  fact  Mr.  Eldredge 
in  his  brief  made  an  insinuation  to  that  effect. 

Thus  the  Supreme  Court  Report  publishes  a  libel  against 
me. 

CRITICISM    OF    THE    LEGAL    POINTS    OF    THE    DECISION. 

The  Supreme  Court  referring  to  the  averment  of  my 
bill,  that  the  glass  company  "  agreed  to  conceal  the  same  and 
to  allow  said  glass  company  to  retain  the  full  control  of  the 
property  free  from  any  recorded  or  known  lien  ;  that  in  pur- 
suance of  such  agreement  said  First  National  Bank  of  Peru, 
with  the  intention  of  allowing  said  glass  company  to  obtain 
new  and  future  credit  elsewhere  and  to  defraud  its  creditors, 
did  keep  concealed,"  says,  "  It  must  be  admitted  that  if  the 
same  was  stricken  out  of  the  bill  it  would  be  demurrable  on  its 
face  for  want  of  equity."  That  is  to  say,  if  all  the  other  alle- 
gations of  the  bill  were  admitted  to  be  true  and  this  one  were 
omitted,  the  complainant  would  have  no  case  entitling  him  to 
any  relief  in  equity.  By  implication  it  appears  that  the  bill 
would  be  maintainable  if  the  proof  sustained  that  averment. 

From  this  they  go  on  to  declare — 

ist.  That  "  no  particle  "  of  evidence  supports  that  aver- 
ment. 


37 

2nd.  That  "  no  evidence  "  even  "  tends  to  prove  "  any 
"  acts  or  declarations  by  the  bank  calculated  to  induce  me 
to  give  credit"  to  the  glass  company. 

3rd.  That  "  nothing  "  shows  anywhere  against  the  "  hon- 
est belief  "  of  the  bank  that  the  glass  company  would  overcome 
its  embarrassment,  and  pay  its  debts  if  its  credit  could  be  main- 
tained. 

The  circumstances  urged  in  support  of  the  controlling 
averment,  the  court  indirectly  avoids  considering  by  claiming 
that  the  argument  of  my  counsel  proceeded  throughout  upon 
the  " contrary  "  proposition  that  the  "bank  took  and  held  its 
notes  under  circumstances  that  made  its  conduct  operate  as  a 
fraud  upon  others,"  and  then  they  proceed  as  though  circum- 
stantial evidence  was  of  no  avail  to  prove  fraud. 

IDENTITY    OF    THE    "  AVERMENT  "    AND    THE    "  PROPOSITION." 

The  "averment"  referred  to,  and  the  "proposition"  ar- 
gued, are  one  and  the  same  thing  in  substance,  stated  in  differ- 
ent terms  ;  and  if  the  "  proposition  "  is  established  by  the  "  cir- 
cumstances," so  also  is  the  "  averment "  of  an  agreement  to 
conceal.  , 

The  terms,  "  to  defraud  its  creditors"  in  said  averment 
''and  as  a  fraud  upon  others"  used  by  the  court,  alike  state, 
not  a  fact,  but  a  conclusion  to  be  drawn  from  the  facts  proved, 
and  the  "  c.rcumstances  "  alluded  to  can  only  be  those  recited 
in  the  averment. 

The  court  holds  that  a  creditor  of  an  insolvent  has  the  right 
to  take  judgment  notes  and  conceal  them  and  to  allow  the  in- 
solvent to  retain  full  control  of  his  property  free  from  recorded 
or  known  lien,  but  has  not  the  right  to  agree  to  do  so.  That 
is  to  say,  one  can  have  a  right  to  do  a  thing  which  he  can  not 
rightfully  make  an  agreement  to  do. 

The  opinion  also  takes  the  same  ground  with.reference  to 
the  intention  of  the  parties.  What  can  be  the  nature  of  the 
thing  or  act  which  one  can  rightfully  do  but  not  rightfully  have 
the  intention  of  doing? 

The  court  in  effect  requires  the  "  intention "  and  the 
"  fraud  "  to  be  directly  proved,  and  does  not  consider  that  both 
are  legally  inferrable  from  the  facts  which  are  either  admitted 
or  not  disputed.  These  things  are  seldom  if  ever  provable  by 


38 

direct   evidence,  but  are  established  as  conclusions  drawn  from 
proved  facts. 

THE    FACTS    ESTABLISHED. 

The  following  facts  of  said  averment  are  established,  (i) 
The  bank  knew  the  glass  company  was  insolvent  prior  to 
and  at  the  time  of  taking  the  judgment  notes.  (2)  The  bank 
did  conceal  the  judgment  notes.  (3)  The  bank  did  allow  the 
glass  company  to  retain  full  control  of  the  property  without 
any  known  or  recorded  lien.  (4)  The  bank  expected  the 
glass  company  would  obtain  future  credit  elsewhere.  (5) 
The  bank  did  delay  in  entering  up  judgment  on  the  notes  for 
over  eleven  months  after  they  became  due.  (6)  The  bank  did 
then  enter  up  judgment  with  the  express  purpose  of  defeating 
all  other  claims,  or,  in  other  words,  for  the  purpose  of  grasp- 
ing all  the  unincumbered  assets  of  the  glass  company  to  pay 
its  own  debt  before  any  others. 

The  law  is  settled  that  an  unrecorded  mortgage  is  no 
effectual  against  the  rights  of  others  ;  in  other  words,  that  the 
relation  of  creditor  and  debtor  as  to  the  particular  property 
described  in  a  mortgage  in  the  possession  of  the  mortgagor 
must  be  made  public  in  order  to  be  not  fraudulent  as  to  third 
parties. 

It'  is  also  well  settled  that  as  against  the  rights  of  the  pub- 
lic a  recorded  chattel  mortgage  is  unavailing  to  protect  past 
due  notes  secured  thereby,  the  policy  of  the  law  being  that  it 
is  fraudulent  as  to  the  public  to  permit  personal  property  to  re- 
main in  the  possession  of  the  owner  with  an  outstanding  and 
matured  right  of  defeasance  in  another. 

MAINTAINING    THE    CREDIT    OF    THE    BANK. 

In  the  original  opinion  the  court  uses  this  language: 

"  There  is  nothing  in  the  bill,  and  certainly  nothing  in  the 

"evidence,  to  show  that  at  the  time  appellee  took  its  notes  and 

"refused  to  take  mortgage  security,  it  did  not  honestly  believe, 

"  that   notwithstanding  the  insolvency  of  the  glass  company,  it 

"would,  if   its  credit  could  be  maintained,  successfully  recover 

"  from  its  embarrassment,  continue  business  and  pay  all  its  debts." 

I.     What  is  here  predicated  generally  of  the  transaction  is 

that  a  creditor  may  know    the  debtor  to  be   insolvent  and  yet 

take    a    preference,  if    he    honestly  believes    the    credit  of    the 


debtor  can  be  maintained  and  he  by  continuing  in  business  can 
pay  all  his  debts.  No  notice  is  taken  of  the  fact  that  the  bank 
delayed  taking  judgment  after  the  paper  was  due,  and  that 
the  amount  of  the  note  was  sufficient  to  drive  the  company  into 
liquidation. 

2.  It  is  not  intimated  by  what  means  the  credit  is  to  be  main- 
tained, but  left  to  be  inferred  that  a  secretly  preferred  creditor 
may  help  maintain  the  credit  of  an  insolvent  without  loss  to  him- 
self in  case  of  failure  to  maintain  the  credit. 

Postponement  of  payment  of  a  past  due  obligation  of  an 
insolvent  debtor  by  one  of  his  creditors,  on  a  private  agreement 
which  would  injure  the  credit,  if  made  public,  should  have  been 
declared  fraudulent  as  to  other  creditors  in  case  of  failure. 

The  secrecy  of  the  preference  during  the  period  in  which 
the  credit  is  maintained  by  the  help  of  the  creditpr,  yields  a 
necessary  inference  of  fraud  within  the  contemplation  of  both  the 
debtor  and  creditor  under  such  circumstances,  and  should  be  de- 
clared a  conclusive  presumption  of  fraud. 

The  creditor  who  thus  postpones  the  collection  of  his  claim 
against  an  insolvent  debtor  upon  a  judgment  note,  giving  him 
the  right  to  enter  up  judgment  at  his  option,  intentionally  aids 
the  debtor  in  obtaining  further  credit,  to  the  extent  to  which  his 
delay  gives  color  to  solvency  and  the  appearance  of  business  pros- 
perity. 

If  the  law  permits  a  creditor  under  such  circumstances  to 
help  maintain  the  credit  of  an  insolvent  debtor  to  the  extent  of 
concealing  a  preference  at  the  creditor's  option,  it  is  wrong. 
The  relation  indicated  should  be  declared  fraudulent  as  to  other 
creditors  in  case  of  failure.  Credit  given  to  a  debtor  upon  a 
preference  under  circumstances  where  it  would  injure  the  credit 
of  the  debtor  if  the  preference  were  made  public,  is  fraudu- 
lent as  to  the  other  creditors  of  the  debtor  in  case  the  enfor- 
cing of  the  preference  results  in  producing  a  failure  of  the  debtor 
in  business. 

The  appearance  of  wealth  or  business  prosperity  with  a 
private  agreement  of  preference,  or  for  a  preference  under  the 
circumstances  indicated, is  fraudulently  deceptive  as  to  the  public, 
and  especially  fraudulent  is  the  possession  of  property  by  an 
insolvent,  with  an  outstanding  matured  right  of  defeasance  in 
•mother. 


40 

What  has  the  honest  (z.  e.,  real)  belief  of  the  bank  to  do 
with  the  case  ?  Does  the  Supreme  Court  mean  to  imply  that 
the  end  may  justify  the  means,  and  that  a  transaction  is  honest 
or  fraudulent  according  to  its  success  or  failure? 

And  why  may  not  the  implied  argument  of  the  Supreme 
Court  be  applied  to  other  cases  like  an  unrecorded  mortgage  or 
a  sale  without  change  of  possession? 

HOW  WAS  THE  CREDIT  OF  THE  GLASS  co.  TO  BE  MAINTAINED? 

Taking  it  for  granted  that  the  bank  "  honestly  believed 
that  the  company  would  recover  from  its  embarrassment  if  its 
credit  could  be  maintained,"  did  the  court  stop  to  consider  the 
full  import  of  the  words  "  if  its  credit  could  be  maintained." 
By  'what  process  could  or  was  its  credit  to  be  maintained  after 
the  judgment  note  had  been  given  ?  No  one  would  then  with 
knowledge  of  this  fact  trust  the  company  to  the  extent  of  a 
single  dollar.  Neither  the  company  nor  the  bank  could 
thereafter  maintain  the  credit  without  deceiving  others  with 
whom  the  glass  company  might  deal.  The  bank  could  safely 
count  upon  the  probability  that  no  one  would  inquire  of  it. 
The  acceptances  were  still  held  and  renewed.  The  question 
with  the  bank  and  the  company  was:  How  shall  we  induce 
others  dealing  with  the  company  to  believe  that  the  company 
is  not  so  largely  in  debt  as  it  actually  is  and  that  it  owns  the 
plant  and  personal  property  in  its  possession.  This  is  the  foun- 
dation of  credit.  That  the  appearance  of  wealth  by  the  com- 
pany was  false  and  deceptive  is  without  doubt.  That  the  bank 
was  aware  of  the  situation  is  also  without  doubt.  That  the 
bank  expected  t-hat  the  company  would  get  credit  upon  the  false 
and  deceptive  appearance  can  not  be  dojjbted.  It  knew  that 
the  company  could  not  get  credit  except  upon  the  false  appear- 
ance or  by  making  false  answer  to  inquiries  concerning  its  affairs. 

The  company  did  actually  misrepresent  its  affairs  to  me, 
for  the  purpose  of  obtaining  credit.  We  therefore  have  the 
well  laid  plan  for  misrepresentation  and  proof  of  one  instance 
of  misrepresentation  by  which  the  company  obtained  $14,500, 
which  is  followed  shortly  after  by  the  action  of  the  bank  in 
entering  judgment.  The  conclusion  that  it  was  in  collusion 
with  the  company  and  connived  at  its  false  representations  is 
irresistible. 


41 

The  judgment  notes  were  not  made  for  the  purpose  of 
security  alone,  but  to  enable  the  bank  to  help  maintain  the 
credit  of  the  glass  company  with  less  risk  than  otherwise  in 
case  of  failure,  to  make  the  bank  safer  in  case  of  failure. 
The  agreement,  to  conceal  was  implied  ;  the  bank  refused  a 
mortgage  on  the  express  ground  of  publicity  and  took  the 
judgment  notes  on  the  express  ground  of  secrecy.  It  was  the 
purpose  of  both  to  maintain  the  credit  and  protect  the  bank  in 
case  of  failure;  both  knew  the  first  object  would  be  defeated 
by  disclosure. 

THE  CONTRAST  BETWEEN  MY  CASE  AND  THAT  OF  THE  BANK. 

The  strictly  personal  imputations  involved  in  the  language 
of  the  Supreme  Court  in  the  clause  of  their  opinion  that  was 
finally  dropped  as  coming  from  the  court  but  stated  as  one  of  the 
prominent  points  made  by  the  counsel  for  the  appellee,  I  will 
hereafter  deal  with.  Here  however  I  will  show  how  utterly 
groundless  and  bad  as  mere  law  and  logic  that  insinuation  is. 
Not  only  were  my  interests,  motives  and  intentions  absolutely 
different  from  those  of  the  bank,  but  also  the  information 
upon  which  I  proceeded  and  the  natural  inferences  derived 
therefrom. 

The  information  with  which  I  was  supplied  concerning  the 
financial  condition  of  the  glass  company  showed  it  to  be  the 
owner  of  property  very  much  more  than  sufficient  to  pay  all 
its  debts.  It  is  not  pretended,  has  never  been  suggested,  and 
can  not  be  argued,  that  I  believed  or  had.any  reason  to  believe 
that  the  glass  company  was  unworthy  of  credit  or  that  it  pur- 
posed or  was  inclined  to  give  preferences  to  one  creditor  over 
another.  Upon  such  information  no  suggestion  could  arise  in 
my  mind  that  the  interests  of  any  creditor  could  be  endangered 
or  even  disfavored  by  my  transaction.  The  ordinary  and  nat- 
ural inference  would  rather  be  that  the  interests  of  creditors 
would  be  promoted  since  the  glass  company  would  be  supplied 
with  a  large  sum  of  ready  cash. 

But  the  bank  was  intimately  acquainted  with  the  precari- 
ous financial  condition  of  the  glass  company.  The  bank  knew 
that  the  glass  company  was  insolvent  and  compelled  to  resort 


42 

to  all  sorts  of  devices  to  maintain  its  credit.  The  bank  knew 
that  if  the  public  should  learn  the  condition  of  the  glass  com- 
pany as  it  was  known  to  the  bank,  the  glass  company  would 
at  once  be  regarded  as  utterly  unworthy  of  credit.  The  bank 
must  have  known  that  the  glass  company  proposed  to  contract 
debts  and  borrow  money  from  others  after  giving  the  judgment 
notes  to  the  bank.  The  bank  knew  that  in  order  to  do  this 
the  glass,  company  would  be  compelled  to,  and  would  misrep- 
resent its  financial  condition  in  ways  similar  to  that  practiced 
upon  me.  The  bank  must  have  known  that  ignorance  of  the 
existence  of  its  judgment  notes  would  be  an  indispensable 
condition  for  the  success  of  any  effort  that  the  glass  company 
might  make,  that  involved  its  credit.  The  bank  knew  that  the 
interests  of  all  existing  unsecured  creditors  as  well  as  the  inter- 
ests of  all  who  might  give  credit  to  the  glass  company  without 
taking  good  security,  would  be  and  remain  in  great  jeopardy 
and  might  eventually  be  wholly  sacrificed  as  a  consequence  of 
its  transaction. 

I  lent  a  large  sum  of  ready  cash  which  increased  the  re- 
sources of  the  glass  company  to  the  extent  of  its  amount. 
The  bank  had  already  parted  with  its  money.  The  resources 
of  the  glass  company  were  not,  as  in  my  case,  increased,  but 
on  the  very  contrary  they  were  almost  as  a  whole  placed  at 
the  mercy  of  the  bank.  My  transaction  had  no  need  what- 
ever of  secrecy,  but  its  publication  in  full  while  it  might  have 
caused  an  inquiry  into  the  affairs  of  the  glass  company  would 
upon  close  examination  have  affected  its  credit  favorably.  No 
secrecy  could  have  been  contemplated.  The  transaction  of 
the  bank,  if  published,  would  have  operated  to  have  closed 
both  the  glass  company  and  the  bank  at  once.  Secrecy  was 
of  vital  importance  to  both,  and  the  very  reason  why  the  stipu- 
lations to  that  effect  were  not  put  in  express  terms  was  the 
open  absurdity  of  verbally  promising  one  another  to  conceal 
those  things  which  each  knew  the  other  to  be  above  all  things 
anxious  to  conceal. 

No  interest  or  motive  beyond  mere  good  will  can  be  im- 
puted to  me  for  desiring  not  to  impair  the  credit  of  the  glass  com- 
pany. Had  I  thought  its  credit  in  need  of  support,  I  would 
either  have  refused  to  lend,  or  I  would  have  taken  real  security 


43 

before  I  parted  with  my  money.  The  bank  had  every  selfish 
interest  and  motive  for  supporting  and  fostering  the  credit  of 
the  glass  company.  The  very  existence  of  the  bank  hung 
upon  the  maintenance  of  the  credit  of  the  glass  company  and 
the^conduct  of  the  bank  in  reference  to  the  credit  of  the  glass 
company  was  prompted  solely  by  its  own  selfish  interests  and 

motives. 

i 

I  respected  the  credit  of  the  glass  company,  refused  to  take 
a  present  mortgage  to  remain  unrecorded,  waived  a  present 
mortgage  to  be  recorded,  and  took  the  simple  promise  of  the 
glass  company  not  to  (sell  or)  mortgage  its  property  with- 
out first  giving  me  a  mortgage  for  my  debt.  The  bank  also 
regarded  the  credit  of  the  glass  company  and  declined  any 
mortgage,  taking  in  lieu  of  it  the  judgment  notes. 

I  acted  on  information  favorable  to  the  credit  of  the 
company,  against  my  own  interests.  The  bank  acted  on  full 
information  that  fully  impeached  the  credit  of  the  company,  in 
pursuit  solely  of  its  own  interests. 


THE    INSINUATION. 

In  its  original  opinion  the  Supreme  Court  said: 

"  Months  after  the  transaction  between  appellee  and  the 
"company,  appellant,  according  to  his  own  testimony,  declined, 
"or  at  least  consented  not  to  take  mortgage  security,  because  it 
"  would  '  spoil  their  credit.'  He  refused  to  take  a  mortgage 
"  and  withhold  it  from  record,  because  he  thought  that  would 
'"be  dishonest  against  the  public,'  but  he  was  willing  to  and  did 
"  make  an  agreement  with  Mr.  De  Steiger  that  in  case  the  com- 
"  pany  desired  to  give  a  mortgage  he  should  be  notified  and  have 
"  a  first  mortgage.  It  would  certainly  be  difficult  to  condemn 
"the  transaction  between  appellee  and  the  glass  company  with- 
" out  also  pronouncing  that  of  appellant  fraudulent  (and  he  is 
"  the  only  one  here  complaining);  but  we  know  of  no  rule  of 
"  law  or  business  which  condemns  either." 

This  language  was  altered  slightly  in  the  amended  opin- 
ion filed  Oct.  19,  1889,  so  as  to  read  thus,  viz.: 


44 

"  Months  after  the  transactions  between  appellee  and  the 
"company,  appellant,  according  to  his  own  testimony,  declined, 
'  or  at  least  consented  not  to  take  mortgage  security  because  it 
'•  would  injure  its  credit.  He  refused  to  take  a  mortgage  and 
"  withhold  it  from  record  because  he  thought  that  would  be  dis- 
"  honest  against  the  public,  but  he  was  willing  to  and  did  make 
'•  an  agreement  with  Mr.  De  Steiger  in  case  the  company  desired 
"to  give  a  mortgage  on  its  property  he  should  be  notified  and 
"  have  a  first  mortgage.  It  would  certainly  be  difficult  to  con- 
"demn  the  transaction  between  appellee  and  the  glass  company 
"  complained  of  without  also  condemning  that  of  appellant.  We 
"  know  of  no  rule  of  law  or  business  by  which  either  should  be 
"pronounced  fraudulent  or  immoral  and  no  reflection  upon  the 
"  honesty  or  fair  dealing  of  appellant  is  hereby  made." 

By  this  language  in  both  forms  of  opinion  the  Supreme 
Court  insinuates  that  according  to  my  testimony  I  supposed 
that  the  De  Steigers,  on  finding  themselves  hopelessly  bank- 
rupt, would  naturally  resolve  to  give  to  some  friend  of  theirs  a 
mortgage  for  their  own  benefit. 

They  insinuate  that  the  glass  company  and  myself  had  an 
understanding  in  regard  to  this  supposed  project  on  its  part 
and  in  regard  to  its  precarious  financial  condition.  They  insin- 
uate that  I  was  ready  to  conceal  from  others  the  condition  of 
the  glass  company,  ready  to  favor  its  dishonest  designs  against 
others  and  ready  to  support  an  unmerited  credit  for  it.  They 
insinuate  that  I  took  "  Exhibit  L  "  with  these  ideas  especially 
in  mind.  They  insinuate  that  my  refusal  to  take  an  unrecorded 
mortgage  on  the  ground  that  it  would  be  dishonest  against  the 
public  was  a  piece  of  pretense  and  hypocrisy. 

In  order  to  give  more  color  to  their  insinuations,  they 
say  that  I  made  an  "agreement"  with  De  Steiger  that  when- 
ever the  glass  company  "desired"  I  was  to  be  "notified" 
and  have  a  first  mortgage.  Notice  the  subtle  design  of  the 
language  used.  Mark  the  office  and  effect  of  the  words 
"agreement,"  "desired,"  and  "notified"  as  the  Supreme  Court 
has  combined  them  with  its  other  expressions.  What  is  in- 
tended to  be  conveyed  thus  but  that  I  was  privy  to  the  "  de- 
sires"  of  the  glass  company  and  had  so  good  an  "  understand- 
ing "with  Mr.  De  Steiger  and  he  with  me  in  respect  to  the 


45 

occasion  proper  for  my  first  mortgage,  that  he  was,  as  it 
were,  to  stand  on  guard  and  "  notify  "  me  when  the  anticipated 
occasion  should  arrive? 

And  all  this  appears,  so  the  Supreme  Court  say,  "  ac- 
cording to  my  own  testimony." 

Now  at  least  at  the  time  of  the  filing  of  the  amended  opin- 
ion trie  Supreme  Court  must  have  known  better  than  to  make 
the  assertion  that  any  such  thing  or  things  appear  "  according 
to  my  own  testimony."  By  my  petition  for  a  rehearing  the 
Supreme  Court  was  shown  that  my  testimony  was  precisely  to 
the  very  contrary  effect.  (See  my  testimony  printed  on  pp. 
24-27.)  So  also  in  regard  to  the  other  reckless  assertion  that 
I  was  to  be  "  notified"  by  the  De  Steigers  when  it  should  be- 
come proper  fof  me  to  have  a  first  mortgage.  In  my  petition 
for  a  rehearing  I  pointed  out  the  groundlessness  of  this  asser- 
tion, that  the  words  did  not  appear  in  "  Exhibit  L,"  and  that 
they  were  not  contemplated  by  me. 

When  such  misrepresentations  are  made  by  the  Supreme 
Court  why  should  it  not  be  said  that  they  are  characteristic 
marks  of  the  spirit  that  governed  its  action  and  expression  ? 
Why  should  it  not  be  said  that  they  are  chargeable  with  plain 
prevaricat  on  and  with  perverting  the  evidence  for  sinister  pur- 
poses against  me? 

THE    INSINUATION    GROUNDLESS. 

It  is  not  possible  to  construe  "  Exhibit  L"  to  mean  any 
promise  to  give  me  any  special  favor.  Indeed  it  is  but  the  bare 
promise  of  the  company  not  to  defraud  me  by  cutting  off  my 
recourse  on  their  property.  It  did  not  imply  that  the  glass 
company  was  to  give  me  any  mortgage  whatever,  save  only 
in  the  one  case  (if  it  should  occur)  that  the  glass  company 
should  be  about  to  mortgage  its  property  to  some  one  else  than 
me. 

By  the  terms  of  "  Exhibit  L,"  which  was  drawn  up  in 
close  relation  with  Mr.  De  Steiger's  statement  "  Exhibit  C  " 
and  the  balance  sheet,  "  Exhibit  D,"  I  was  to  have  a  first  mort- 
gage from  the  glass  company  in  case  they  should  mortgage 
their  property. 


46 

Now  under  what  circumstances  must  any  case  that  can  be 
supposed  in  the  matter  be  imagined  ?  So  far  as  I  can  see  there 
are  only  three  cases. 

ist.  Some  creditor  of  the  glass  company  might  become 
uneasy  and  demand  payment  or  mortgage  security,  threaten- 
ing suit  in  case  his  demands  were  not  complied  with. 

In  this  case  the  glass  company  would  have  shown  the  im- 
portuning creditor  the  balance  sheet  which  they  showed  to 
me,  or  rather  a  similar  one.  They  would  also  have  said  to  the 
threatening  creditor,  "  If  you  insist  on  a  mortgage  from  us  we 
are  bound  to  Mr.  Hegeler  to  give  him  a  first  mortgage  for 
the  $10,000  which  he  loaned  to  us  without  real  security  on 
our  promise  to  him  not  to  mortgage  our  property  without  first 
giving  him  a  first  mortgage.  Had  then  the  threatening  creditor 
still  urged  for  his  mortgage  and  in  consequence  the  glass  com- 
pany had  given  to  me  the  first  mortgage  for  my  $10,000,  and 
then  to  the  threatening  creditor  a  second  mortgage,  the  othei 
creditors  would  have  been  in  the  condition  as  follows: 

As  by  the  balance  sheet  shown  to  me  the  material  on 
hand  and  the  stock  alone  was  nearly  sufficient  to  pay  off  all  the 
indebtedness  of  the  glass  company,  and  the  real  estate  and 
works  were  scheduled  in  the  balance  sheet  at  $88,930,  incum- 
bered  with  only  the  old  mortgage  of  $5,000  on  the  window-glass 
house  scheduled  at  $9,000,  which  mortgage  I  was  to  take  up  as 
an  investment,  the  glass  company  by  going  into  liquidation  could 
with  the  aid  of  only  $2,110,  to  be  derived  from  the  sale  or 
mortgage  of  their  real  estate,  pay  all  debts. 

2nd.  This  is  the  main  case  under  consideration  in  drawing 
"  Exhibit  L"  and  is  that  the  glass  company  would  see  the 
advisability  of  mortgaging  their  whole  plant  for  a  sufficient 
sum  to  enable  it  to  do  a  cash  business— say  $35,000,  besides  the 
$5,000  window-house  mortgage,  the  old  mortgage  which  I 
was  taking  up  as  an  investment,  in  which  case  it  would  either 
give  me  a  first  mortgage,  or  as  would  be  more  likely,  would  pay 
off  my  notes. 

3d.  This  is  the  case  which  the  Supreme  Court  insinuated, 
against  me. 

The  Supreme  Court  as  a  necessary  conclusion   from  their 


47 

opinion,  regards  it  as  the  ordinary,  natural  supposition  that 
the  De  Steigers  on  finding  themselves  hopelessly  bankrupt 
would  resolve  to  give  to  some  friend  of  theirs  a  wholesale 
mortgage  of  their  plant  for  the  purpose  of  holding  the  same 
for  their  benefit,  and  the  Supreme  Court  insinuate  that  I  sup- 
posed likewise  and  had  it  in  mind  when  I  requested  them  to 
give  me  the  paper  "Exhibit  L"  in  order  to  have  a  first  mort- 
gage before  this  contemplated  fraudulent  mortgage. 

The  Supreme  Court  seem  actually  to  believe  that  I  would 
have  loaned  $10,000  to  De  Steiger  on  no  security  but  the  per- 
sonal endorsements  of  the  De  Steiger  family  yet  believing 
that  they  would  thus  treat  their  creditors. 

THE    MOTIVES    OF    THE    INSINUATION. 

Now  what  account  can  be  given  why  the  Supreme  Court 
acted  as  it  did? 

Mr.  Eldredge  in  referring  to  "  Exhibit  L,"  and  the  cir- 
cumstances of  its  passing,  says: 

"  So  it  will  be  seen  that  this  loan  was  made  upon  the 
"  express  stipulation  that  he  should  have  the  first  lien  by  way 
"of  a  mortgage  on  the  property  of  De  Steiger  Glass  Company, 
"  when,  the  exigency  should  occur  for  its  execution  /"  meaning  to 
imply  and  suggest  that  there  was  some  evidence  to  the  effect  that 
"  Exhibit  L  "  had  reference  to  the  giving  me  a  first  mortgage 
in  case  the  glass  company  should  be  in  straits  and  propose  and 
be  about  to  arrange  its  property  to  the  disadvantage  of  its  cred- 
itors at  large.  This  charge  is  not  directly  made,  it  is  insinuated. 

Webster  thus  defines  the  insinuation  as  related  to  the 
innuendo  or  direct  charge,  "  An  insinuation  turns  on  no  double 
"  use  of  language,  but  consists  in  artfully  winding  into  the 
"  mind  imputations  of  an  injurious  nature  without  making  any 
"  direct  charge,  and  is,  therefore,  justly  regarded  as  one  of  the 
"basest  resorts  of  malice  and  falsehood." 

This  insinuation  of  the  lawyer  of  the  bank,  the  Supreme 
Court  seized  upon  with  that  light  esteem  with  which  they  seem 
to  regard  the  good  names  of  suitors.  They  took  up  "  Ex- 
hibit L,"  out  of  its  intimate  connection  with  the  statement  made 
from  memory  by  De  Steiger  ("Exhibit  C,"  see  p.  4)  and  the 


48 

balance  sheet  (see  p.  4).  The  fact  that  my  leading  counsel, 
Mr.  Bull,  had  died,  and  that  the  briefs  were  filed  in  close  succes- 
sion at  the  last  moment  did  not  secure  their  attention.  They 
find  for  my  reply  brief,  nothing  but  a  copy  of  the  opinion 
of  the  Appellate  Court  and  no  repelling  of  the  insinuation 
of  Mr.  Eldredge.  They  apparently  do  not  look  into  the 
opinion  of  the  Appellate  Court  to  see  if  the  charge  against  me 
is  there  made,  nor  into  that  of  the  Circuit  Court  which  tried  the 
case,  but  all  unsupported  by  even  any  attempt  at  proof  as  they 
find  the  insinuation  of  Mr.  Eldredge  to  be,  they  themselves 
from  the  abstract  of  my  testimony,  echo  and  dress  up  the  same 
insinuation,  and  thereby  impute  to  me  that  I  hypocritically  placed 
myself  on  high  moral  grounds  in  refusing  a  mortgage  that  was 
not  to  be  recorded  because  "  that  would  be  dishonest  against  ' 
the  public"  and  at  the  same  time,  I  craftily  schemed  to  accom- 
plish essentially  the  same  thing  under  cover. 

Now,  is  it  compatible  with  proper  judicial  ethics  for  the 
Supreme  Court  to  make  such  an  insinuation?  Should  they  not 
openly  have  said,  in  case  they  regarded  the  matter  as  relevant 
to  the  case  before  them:  "  We  find  in  the  brief  of  the  appellee 
the  insinuation  made  that  appellant  obtained  from  the  De 
Steiger  Glass  Company  in  the  '  Exhibit  L'  a  similar  security 
to  that  which  he  charges  as  fraudulent  in  appellee.  We  find  no 
answer  to  this  serious  charge  in  appellant's  reply  brief,  and  as 
his  testimony  in  regard  to  his  not  wanting  to  spoil  the  credit  of 
the  glass  company,  as  well  as  the  meaning  of  'Exhibit  L,'  is 
unclear  to  us,  we  find  against  him  for  that  reason." 

Had  not  the  insinuations  of  the  Supreme  Court  against  me 
in  their  original  opinion  been  repeated  and  persisted  in  after 
my  petition  for  a  rehearing,  their  original  course  in  the  matter 
would  allow  of  excuses  which  their  subsequent  delinquencies 
forbid. 

They  are  all  men  who  are  supposed  to  possess  good  intel- 
ligence. They  would  undoubtedly  prefer  not  to  have  their 
conduct  excused  at  the  expense  of  the  vigor  of  their  under- 
standings. 

But  after  the  filing  of  my  petition  for  a  rehearing  which 
courteously  directed  their  attention  to  my  testimony  (see  p. 


49 

26),  and  fully  informed  them  concerning  the  groundlessness 
and  impropriety  of  the  insinuations  of  the  lawyer  of  the  bank 
which  they  had  repeated,  and  which  also  explained  to  them 
that  the  lack  ot  an  answer  in  my  reply  brief  to  his  insinu- 
ations was  a  consequence  of  the  death  of  my  counsel,  and  after 
the  Supreme  Court  instead  of  granting  that  petition  for  re- 
hearing, reiterated  their  adopted  insinuation,  no  excuse  is  imagin- 
able that  does  not  impeach  either  their  intelligence  or  their 
moral  integrity  as  faithful  and  dispassionate  judges. 

The  matters  insinuated  against  me  touched  not  merely  the 
recovery  or  loss  of  a  sum  of  money,  but  my  good  name. 
Hence  it  would  behoove  honorable  men  to  ascertain  first  of  all 
whether  or  not  the  matters  insinuated  were  pertinent  to  the  issues 
involved  in  the  case.  If  not,  then  the  only  notice  fit  to  be 
taken  thereof  would  be  a  rebuke  to  the  counsel  for  making 
the  insinuation.  If,  however,  it  should  appear  necessary  to 
decide  upon  the  matters  involved  in  the  insinuation,  then  cer- 
tainly I  should  have  had  the  opportunity  to  have  met  that 
issue.  Definite  charges  instead  of  insinuations  should  have 
been  required. 

Or  does  the  Supreme  Court  regard  itself  above  and  ex- 
empt from  the  observance  of  those  rules  which  are  recognized 
as- binding  among  all  men  who  expect  to  be  regarded  as  hon- 
orable —  those  rules  of  justice  all  the  more  sacred  because 
there  is  no  tribunal  to  enforce  them  save  the  consent  and  repro- 
bation of  honorable  men? 

Does  the  Supreme  Court  regard  those  rules  as  rules  which 
mere  office-holding  is  privileged  to  dispense  with? 

So  it  would  seem ;  and  to  all  right  thinking  and  right  feel- 
ing the  most  outrageous  feature  of  the  conduct  of  the  Supreme 
Court  in  my  case  is  the  careless,  lordly  superciliousness  they 
manifest  in  regard  to  their  dealings  with  my  good  name. 

This  spirit  is  specially  noticeable  in  their  evident  notion 
that  a  remark  like  "  no  reflection  upon  the  honesty  and  fair 
dealing  of  appellant  is  hereby  made,"  is  all  that  ought  to 
be  expected  from  them  and  ought  to  be  taken  by  me  as  a 
sufficient  remedy  for  the  wrong  of  their  still  standing  insinua- 
tion. 


00 

Their  disclaimer  that  no  reflection  upon  my  honesty  or 
fair  dealing  is  made  by  them  stood  absolutely  worthless  and 
absurd  while  they  reiterated  and  persisted  in  the  same  insinua- 
tions as  at  first 

Moreover  when  at  last  this  insinuation  was  dropped  out  of 
their  opinion,  potent  persuasions  seem  to  have  existed  for 
inserting  it  still  in  a  place  in  the  report  of  my  case  where  it  had 
not  appeared  in  the  advance  sheets  of  the  same. 

SUPREME    COURT    ETHICS. 

And  yet  they  say  that  they  "  know  of  no  rule  of  law  or 
business  by  which  either  (transaction)  should  be  pronounced 
fraudulent  or  immoral." 

Thus  according  to  the  Supreme  Court,  in  a  case  where 
two  parties  are  so  involved  together  in  business  that  the  one  re- 
gards his  interests  as  likely  to  be  promoted  by  the  probable 
projected  frauds  of  the  other,  that  one  may,  knowingly  and 
intentionally  and  for  the  mere  advantage  of  his  own  interests, 
contribute  to  the  frauds  of  the  other  the  otherwise  lacking  and 
indispensable  conditions  of  their  success,  and  to  the  prejudice 
of  those  defrauded,  may  reap  his  expected  advantage  thereby, 
and  yet  obtain  the  absolution  of  the  Supreme  Court  of  Illinois 
as  innocent,  not  only  of  fraud  but  also  of  any  kind  of  immoral- 
ity. 

This  may  be  a  fair  sample  of  the  standard  of  morals  ap- 
proved by  the  Supreme  Court.  If  so  a  lax  standard  of  business 
and  law  must  be  able  to  pass  with  them  and  also  it  may  be  that 
a  lax  standard  of  sensibility  in  regard  to  honor  and  good  name 
is  expected  by  them  to  obtain  among  those  who  have  to  deal 
with  them. 

But  I  have  it  to  say  very  plainly  that  I  differ  with  them 
utterly.  If  my  conduct  was  truly  similar  to  that  of  the  b«nk 
then  their  comparison  was  merited  in  open,  plain,  honest  terms, 
and  need  not  have  been  covertly  insinuated.  I  will  not,  how- 
ever, say  with  them  that  I  "  know  of  no  rule  of  law  or  busi- 
"  ness  by  which  such  conduct  should  be  pronounced  fraudulent 
"  or  immoral."  I  say  that  such  conduct  as  that  of  the  bank  and 
such  as  that  which  the  Supreme  Court  falsely  insinuate  and  fos- 
ter against  me  is  the  conduct  of  swindlers  and  cheats, and  ought 


51 

to  receive  the  reprobation  of  all  good  citizens — that  it  is  a  re- 
proach that  courts  of  law  should  not  visit  such  conduct  with 
their  severe  denunciation  and  endeavor  to  correct  the  injuries 
caused  thereby. 

I   herewith    express    my    thanks   to    the    gentlemen    who 
assisted  me  in  preparing  this  namphlet. 

EDWARD  C.  HEGELER. 
La  Salle,  Illinois. 
August,  1890. 


